The Patent Box Regime In India

Section 115BBF of the Finance Bill, 2016¹ introduced the Patent Box Regime in India. Patent Box Regime is an effort which enables an inventor to benefit through tax concessions on the royalty income. The first country to enforce it was Ireland and hence, the name is derived from its tax form.

Need for the Patent Box Regime in India

1. The existing regime which  provided front end incentive was not sufficient to encourage patenting and innovations in India.
2. Investment linked deductions were to be phased out by the government
3. To encourage the 'Make in India' project.
4. To comply with the Base Erosion & Profit Shifting Project (BEPS)- Action 5 (Countering Harmful Tax Practices)by the Organisation for Economic Co-Operation & Development.