Earning Royalties as a Songwriter, Composer or Music Producer? How This Income Is Taxed

Royalties Collected Through Rights Organisations

A significant share of a songwriter or composer's royalty income, particularly performance royalties (earned when a song is played on radio, television, in public venues, or streamed), is often collected on the creator's behalf by music rights organisations and then distributed periodically, sometimes with a time lag of months between when the underlying usage happened and when the royalty is actually paid out to the creator. For tax purposes, this income is generally recognised based on the method of accounting followed (typically when received or when it accrues, depending on the basis used), with the periodic distribution statements from the rights organisation serving as the key record of what was earned and when.

Worked Example

The Section 80RRB Deduction (and Its Relation to Authors' Royalty Under 80QQB)

There are specific deduction provisions for royalty income from certain categories of intellectual property: Section 80QQB provides a deduction in respect of royalty income from books (for authors), while Section 80RRB provides a deduction in respect of royalty income from patents (for patentees), each subject to its own conditions, caps, and eligibility criteria. Whether a music creator's royalty income from a musical composition could be considered within the scope of either of these specific provisions depends on the precise legal characterisation of the underlying right (a musical work's copyright is conceptually distinct from a literary work covered as a 'book' under 80QQB or an invention covered as a 'patent' under 80RRB), and is a nuanced question; in many cases, music royalty income is simply taxed as ordinary professional income without a specific royalty-deduction provision applying, though the position can depend on the specific facts and the nature of the right being licensed.

Foreign Royalties From International Streaming and Sync Deals

Where a portion of royalty income comes from international streaming platforms or sync licensing deals with foreign production companies, these foreign-sourced receipts are taxable in India for a resident as part of global income, converted to Indian Rupees for reporting, with the possibility of foreign withholding tax having been deducted at source in some cases, in which case the foreign tax credit mechanism under the relevant DTAA may become relevant to avoid double taxation on the same royalty income.