Fiscal Incentives for Scientific Research (FI)

Some of the incentives and support measures presently available for enhancing scientific R&D:

• 100% write-off of revenue expenditure on R&D under section 35(1)(i) of I.T. Act, 1961.
• 100% write-off of capital expenditure on R&D in the year the expenditure is incurred under section 35(1) (iv) of I.T. Act, 1961.
• Weighted Tax deduction @200% on expenditure incurred in approved in-house R&D facility, to companies engaged in business of biotechnology or in any business of manufacture or production of any article or thing (not being an article or thing specified in the list of the eleventh schedule) under section 35(2AB) of I.T. Act, 1961. Provision is valid till 31-03-2017.
• Weighted tax deductions@200% for sponsored research programmes in approved National laboratories, Universities and IITs (Section 35(2AA) of I.T. Act).
• Income tax rebate @175% on donations for scientific research made to non-commercial research organization approved and notified under section 35(1) (ii) and 35(1) (iii) of I.T. Act, 1961.
• Tax Holiday for ten consecutive assessment years to commercial R&D companies under section 80-IB(8A) of I.T. Act, 1961 approved before 31-03-2007.
• Accelerated depreciation allowance upto 40% on investment on new plants and machinery based on indigenous technology as per rule 5(2) of I.T. Rules.
• Customs duty exemption on goods imported for R&D and central excise duty waiver on purchases of indigenous goods for R&D to public funded and privately funded institutions registered with DSIR. (Notification No.51/96-customs dated 23 July 1996 and No. 24/2007-customs dated 1 March 2007; Notification No. 10/97-central excise dated 1 March 1997 and No. 16/2007- central excise dated 1 March 2007).
• Customs duty exemption on imports made for use in R&D projects funded by Govt. in industries (Notification No. 50/96-customs dated 23 July 1996).
• DSIR recognized in-house R&D units engaged in R&D in biotechnology and pharmaceuticals sectors can import specified equipment duty free (List 28). In respect of R&D units with manufacturing facilities, the benefits of full customs duty exemption for specified equipment is also available for manufacturing activity to the extent of 25% of the previous year’s export turnover.
• Central excise duty waiver for 3 years on specified goods designed and developed by a wholly owned Indian company, National laboratory, Public funded research institutions or Universities and patented in any two countries from amongst India, USA, Japan and in any one country of the European Union. The specified goods are manufactured by a wholly owned Indian Company. This exemption is available based on certification from DSIR (Notification No. 13/99-central excise dated 28th February 1999).
• Various funding schemes under ministries/ department of Govt. of India for Technology development, upgradation and commercialization. (eg. DST, DSIR, DBT, CSIR, ICMR, ICAR, TDB, TIFAC, MNRE, MoEF, MoSteel, MoFPI)