Benefits available for "In-house R&D Centres" of companies are -.
 
 
 
-
Weighted deduction of Super-Deduction (Weighted Deduction) of the total expenditure whether Revenue or Capital in nature.
 
-
Duty free import of specified goods (Analytical & specialty equipments)
 
-
Commercial R&D companies eligible for 10yrs. tax holiday
 
-
Other Benefits – Excise duty waiver for 3 yrs., Custom & Excise duty exemption, state subsidy etc.
 

Note:

* Highest rate of depreciation shall be restricted to 40% (for less than 182 days =20%) in non- recognised Units. Wef 01-04-2017

NON- R&D RECOGNIZED UNITS/INDUSTRY
-DEPRECIATION/AMORTIZATION CHARGE ON GROSS BLOCK

IT IS NOTABLE THAT GENERALLY IN COMPANIES THE CHARGE OF DEPRECIATION/AMORTIZATION VARIES BETWEEN 7% TO 11% (APPROX) OF THE GROSS ASSETS BLOCK AND THE SAME IS LIKELY TO BE REDUCED TO HALF VIZ. 4% TO 8% (APPROX) OF GROSS ASSETS BLOCK IN ASSESSMENT YEAR 2017-18 AND MAY FURTHER BE PRUNED TO ALMOST ZERO IN COMING YEARS, AS PER WTO RECOMMENDATIONS.
These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-18 and subsequent years.

Note *

Super-Deduction (Weighted Deduction)

New Section Introduced For Patents Registered In India.

In order to encourage indigenous Research & Development activities and to make India a global R & D hub, the Government has decided to put in place a concessional taxation regime for income from patents. The aim of the concessional taxation regime is to provide an additional incentive for companies to retain and commercialise existing patents and to develop new innovative patented products. This will encourage companies to locate the high-value jobs associated with the development, manufacture and exploitation of patents in India. 
Accordingly, it is proposed to insert new section 115BBF to provide that where the total income of the eligible assessee income includes any income by way of royalty in respect of a patent developed and registered in India, then such royalty shall be taxable at the rate of ten per cent ( plus applicable surcharge and cess) on the gross amount of royalty. No expenditure or allowance in respect of such royalty income shall be allowed under the Act.

 
Financial and other incentives To R & D Centre:
   
-
Write off of revenue expenditure on R&D ;
 
-
Write off of capital expenditure on R&D in the year the expenditure incurred;
 
-
Commercial R&D companies eligible for 10yrs. tax holiday
 
-
Weighted tax deduction of Super-Deduction (Weighted Deduction) to the sponsor of sponsored research programmes in universities, IIT’s and approved national laboratories.
 
-
Super-Deduction (Weighted Deduction) on R&D expenditure incurred in the approved in-house R&D centre of biotechnology or in the business of manufacture or production of any drugs. Pharmaceuticals, electronic equipments, computers, telecommunication equipments, chemicals, aircrafts and helicopters, automobiles including automobile components, or, any other article thing notified. Expenditure on scientific research in relation to drugs and pharmaceuticals shall include expenditure incurred on clinical drug trials, obtaining approvals from any regulatory authority under any Central, State or Provincial Act and filling an application for a patent.
   
  The Ministries/ Govt. Depts. involved in giving approvals are:
 
  • Ministry of Finance
  • Ministry of Chemicals
  • Ministry of Commerce
  • Ministry of Science and Technology
  • Ministry of Heavy Industries
  • Ministry of Shipping, Road Transport and Highways
  • Ministry of Small Scale Industries
  • Ministry of Statistics and Programme Implementation
  • Ministry of Steel
  • Ministry of Environment
  • Department of Industrial Development
  • Department of Electronics
  • Department of Telecommunication
  • Department of Bio-Technology
  • Department of Food Processing
  • Indian Council of Agriculture Research
  • Council of Scientific & Industrial Research
  • Indian Council of Medical Research
  • Defence Research & Development Organisation
  • Department of Atomic Energy
  • Department of Space
 

Tax holiday for ten consecutive assessment years beginning from initial assessment year companies, whose sole object is The Scientific and Industrial Research and Development , and who are approved after the 31st day of March 2000.

Income tax exemption @ Super-Deduction (Weighted Deduction) to Donations made to approved Scientific and Industrial Research Organisations.

Accelerated depreciation allowance for investment on plant and machinery made on the basis of indigenous technology.

Customs duty exemption to public funded R&D institutions and privately funded scientific and industrial research organisations, both for capital equipment and consumables needed for R&D

Excise duty exemption for 3 years on goods designed and developed by a wholly owned Indian company and patented in any two countries out of India , USA, Japan and any one country of European Union

Exemption from customs duty on imports made by industry for R&D projects.

Exemption from price Control of Drugs (Prices Control) Order for drugs, which have been developed indigenously or produced through a process, developed through indigenous R&D.

Pharmaceutical reference standards are allowed to be imported duty free.

Goods specified in List 28 (Comprising of analytical and specialty equipment)for use in

pharmaceutical and biotechnology sector are allowed to be imported duty free meeting certain conditions.
Supports in the form of Grants for industrial R&D projects.

Support in the form of loans/Grants for industrial R&D. Support to industry for R & D through sector specific programmes of scientific and economic ministries.

Association of industry with the national R&D programmes in area of Atomic Energy Space and Defence research.

Promotion of technology transfer from national laboratories and nationally funded R&D Programmes to industry through public sector organisations.

 
The Indian Government aims to double the overall spending on research and development (R & D) to at least 2% of GDP by 2017, the end of 12th Plan from the present < 1%, through higher participation of Private Sector in R & D An investments of Rs.5000 crore fund has also been earmarked to promote R & D for Component Manufacturing sector.
Financial support to meet the developmental expenditure for -
 
  • R&D Project for development of a new/improved product
  • R&D Project for development of a new/improved process
  • R&D Project for development of Capital Goods for Indian/Export market
  • R&D Project for absorption of imported technology with know-how studies
 
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