Indian software companies, big and small carry out development projects for clients outside India either onsite at client locations or their development centers based in and outside India.
The question is why most of these software companies not claiming R&D incentives for their research or development work which are eligible for the R&D tax credit in countries of their operation.
Most of the leading economies of the world offer R&D tax credit, be it in Europe, North America, Australia, and Southeast Asia.
The reason is simple, most of them are not aware that software companies can be eligible for R&D tax credit or apprehensive whether they would be eligible for the same.
Did you know who is the largest beneficiary of R&D incentives in the United States of America?
You would imagine a large industrial company right? No!!!
The answer is Amazon, which saved about USD 400 million in R&D incentives which is also one of the reasons they don’t have to pay corporate tax in the USA.
So the question is how you identify R&D activities and projects which are undertaken by your company.
The answer is to segregate client projects and projects which are not directly linked to client delivery (independent). In client projects, the risk of failure lies with the company which simply means if the project is unsuccessful your company has to bear the cost.
The incentives range from country to country but in most cases, the savings can range from about 15% going up to more than 100%.
This will help you get the extra funding to put in cutting edge technologies in Robotics or AI or NLP which is where the future lies.
So isn’t it time to get started??