|
India’s role in terms of R&D has grown recently. The
cost advantage of having a large pool of relatively
inexpensive, English-speaking employee class makes India
attractive destination for R&D outsourcing. Outsourcing
R&D to India is increasingly being looked at as integral
to strategic decisions of innovators, indicating the
sector’s shift from a cost-driven, low-value service, to
a research driven, high value activity.
Given this scenario, if India is to emerge as a R&D hub,
more tax incentives would be required to be provided.
The wish list in this regard could include:
Availability of weighted deduction
Presently, the provisions allowing weighted deduction of
150% are restrictive in nature and cover only
expenditure incidental to R&D carried on at the in-house
R&D facility. The scope of the benefit should be
expanded to cover expenditure incidental to research
carried outside R&D facility such as clinical trials,
bio-equivalence studies etc carried on in India or in
any foreign country.
Further, the weighted deduction for in-house scientific
research is only allowed for computing income under the
normal provisions of the Income tax Act and not for
computing the Minimum Alternate Tax (MAT) liability. To
encourage R&D activities, such weighted deduction should
also be extended for computing the MAT liability.
Extension of sunset clause for tax holiday
Companies engaged in carrying on scientific R&D are
entitled to a 10 year tax holiday in respect of profits
from such activities. The tax holiday benefit has been a
great source of support for Scientific and Industrial
Research Organisations. However, this tax holiday is
available only for units approved by the prescribed
authority (ie DSIR) before March 31, 2007. The Finance
Act, 2008 extended the availability of the weighted
deduction benefit (discussed above) till March 31, 2012,
whereas the cut off date of March 31, 2007 for the tax
holiday was not extended. Such tax holiday can play a
crucial role in promoting the knowledge based
competitiveness of Indian manufacturers. It is
imperative that the said cut off date for the tax
holiday should be extended till March 31, 2012.
For full text of this article contact the publisher on
info@kppub.com
|
The above content is an
abstract only. For the full Article please contact:
KONGPOSH Publications Pvt. Ltd.
ICS House, C-19, Commercial Complex, SDA, Opp. IIT Gate,
New Delhi, India -110016
Tel.: 26855839, 20057149, Fax: 91-11-26855876
Email:
info@kppub.com /
fpc@vsnl.com, Website:
http://www.kppub.com |
