India: CBDT publishes a notification on the patent box regime

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The Central Board of Direct Taxes (CBDT) released a notification on the patent box regime under section 115BBF of the Income-tax Act, 1961. The new rules deliver additional incentive for companies to retain and develop innovative patented products, in order to promote them to locate high-value R&D jobs in India.

Under the notifications following procedures shall be implemented:

  • The new rules offer that the eligible assessee must electronically furnish form No.3CFA for exercising the option to tax royalty income under Section 115BBF of the Income-tax Act, 1961 from a patent developed and registered in India by the assessee.
  • Form 3CFA must be complete in all respects and furnished by the due date specified in Section 139(1) of the Income-tax Act for furnishing the return for options exercised for that assessment year.
  • The Director-General of Income-tax (Systems) will specify the procedures, formats, and standards for the purposes of ensuring secure capture and transmission data and will also be responsible for evolving and implementing appropriate security.
  • In the form 3CFA, the “eligible assesse” needs to provide general details as well as “eligible patent” details such as the description of the patent, date of grant of a patent, and whether the patent was granted to single persons.
  • Equally, the eligible assessee requests to provide details of royalty income from eligible patent and details of expenditures incurred in India and outside India on an eligible patent.

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