In
our country there are large gaps in important areas of research such as production
design, engineering, development process and plant engineering etc. In order to
promote research and development activities tax incentives are available under
Section 35 for in house research and contribution to approved outside agencies
engaged in scientific research.
An
assessee can claim full deduction for revenue expenditure and capital
expenditure (except land) incurred by him in relation to scientific research
related to his business.
Further,
Finance Act 1999 introduced a weighted deduction of 125% of any sum paid to any
university, college or / an institution or scientific research association for
the purpose of scientific, social or / statistical research.
With
a view to give further boost to research and development activities, a company
engaged in the business of manufacture of any drugs, pharmaceuticals,
electronic equipment, computers, chemicals etc. has been allowed a deduction of
150% of the expenditure incurred with regard to in house research and
development facility.
The
Finance Act 2010 has further enhanced the aforesaid weighted deductions of 125
per cent 33 and
150 per cent to 175 per cent and 200 per cent, respectively (w.e.f. April 1,
2010).
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