Rule 134: Patent royalty tax option in Form 65
Rule 134 prescribes the form for an eligible assessee choosing the identified patent-royalty tax treatment. The royalty must concern a patent developed and registered in India within the parent provision, and the option is furnished in Form 65.
Official notified Income-tax Rules, 2026Need advice on Rule 134?
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Bare law
Rule 134 - Exercise of option for taxation of royalty income from patent under section 194(1)[Table: Sl. No. 2]
(1) For the purpose of exercising the option for taxation of income as royalty in respect of a patent developed and registered in India, by an eligible assessee under section 194(1)[Table: Sl. No. 2], the eligible assessee shall furnish Form No. 65.
(2) The form referred to in sub-rule (1) shall be furnished on or before the due date specified in section 263(1)(c) for filing the return of income for the relevant tax year, if the option is exercised for that tax year.
Rule breakdown
Establish parent-section eligibility
The rule refers to an eligible assessee and royalty for a patent developed and registered in India under section 194(1), Table serial number 2.
Confirm the statutory eligibility and income character before treating Form 65 as an available election. The form does not itself make an otherwise ineligible patent or receipt qualify.
Exercise the option in Form 65
The eligible assessee furnishes the prescribed Form 65 for the option. Keep the patent registration, development and royalty evidence supporting the claim.
Reconcile the form with the actual income and proposed return treatment.
File by the applicable return-linked deadline
Sub-rule (2) requires filing by the stated return due date for the relevant tax year where the option is exercised. The notified text prints section 263(1)(c); verify the current applicable return-date provision and any valid extension.
Do not assume the option can be left until after the return deadline because the underlying patent already exists.
Retain the election record
Preserve the completed form, filing evidence, relevant tax year and supporting eligibility analysis.
Review the parent section for the option’s substantive effects and any continuing restrictions, rather than inferring them from this two-sub-rule procedure alone.
Key takeaways
Form 65
Use the prescribed option form.
Eligibility first
The parent patent-royalty conditions remain essential.
Return-linked deadline
Check the applicable current due date.
Practical checklist
- Verify parent-section eligibility.
- Keep patent and royalty evidence.
- File and retain Form 65 within the applicable deadline.
Avoid
- Do not confuse a procedural form with substantive eligibility.
- Do not infer every ongoing option condition from this rule alone.
FAQs
Does Form 65 make any royalty income eligible?
No. The parent provision’s assessee, patent and royalty conditions must be met.
Which form is prescribed?
Form 65.
Can the form be filed whenever convenient?
The rule ties it to the stated return due date for the year of exercise.
Glossary
- Form 65
- The prescribed form for the specified patent-royalty taxation option.