Title: The Future of Tax Deduction for Research & Development – written by Sangharsh Kale

The Department of Scientific & Industrial Research (DSIR) up until 31st March 2020,  offered manufacturing companies, tax exemptions  u/s 35 (2AB) of the Income Tax Act, 1961 up to 150% for expenses incurred on R&D in their respective field. This exemption would let companies spend more money in their R&D & helped in innovating new technology, product development & related processes.

On 1st April 2020, the Government of India phased down the tax exemption to 100% of the expense incurred on R&D. This decision has come as a significant blow affecting all major manufacturing companies involved in research & development. We at Scinnovation, are positive, that these exemptions wouldn’t be phased down any further.

Earlier to claim these tax deductions, a manufacturing company had to sign an agreement with DSIR for co-operation, a company had to fulfil certain conditions concerning the maintenance of accounts & audit thereof & furnishing of reports in a manner as may be prescribed by DSIR.

With the lowered tax exemption of 100%, the company is not mandated to enter into an agreement with DSIR to claim the tax exemption.

Although, we would recommend that a company trying to avail the tax exemption should apply for recognition as an in-house R&D centre by DSIR. By doing so, the company will drastically speed up the claim period.

We at Scinnovation Consultants will help your company get DSIR Recognition for your Research & Development efforts. Having worked with multiple seed companies we have developed expertise in the area. SCinnovation Consultants has a 100% track record in terms of getting the DSIR Recognition.

For any inquiry please contact Mr. Rajesh Ravindranathan, Client Acquisition Specialist at letstalk@scinnovation.in.

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