What is In-House R&D Recognition
The Department of Scientific & Industrial Research (DSIR), which is under the Ministry of Science & Technology is operating a scheme for granting recognition and registration to in-house R&D set up of Companies engaged in innovative R&Dactivities related to the line of their business, such as development of new product/ technologies, design and engineering, improvements in process/ product/ design, developing new methods of analysis and testing, research for increased efficiency in use of resources such as capital equipment, material and energy, pollution control, effluent treatment and recycling of waste products or any other areas of research.
Benefits of In- House R&D Recognition
Any manufacturing unit having its own in-house R&D set up which is duly recognized by the DSIR department is eligible for following benefits:
1. Under section 35(2) of the Income Tax Act, 1961, 100% deduction is allowed for Capital expenditure on R&D including cost of building (excluding cost of land), plant & equipments etc.
2. Under section 35 (2AB) of the Income Tax Act, a weighted deduction of 200% is allowed to Recognized R&D unit for all expenditures (other than Land & Building) incurred for R&D purpose. Here, it is to be noted that this weighted deduction of 200% is allowed for all the direct expenses incurred for R&D purpose such as Salaries & Allowances, Traveling & Conveyance, Staff Welfare, Electricity, Computer & Software, Raw material used by R&D department and also various other expenditures which are directly incurred for R&D purpose. Therefore an additional amount equivalent to the R&D expenses incurred by a recognized R&D unit is allowed as deduction from the income of such unit while computing the income tax liabilities as per Income Tax Act.
3. 100% exemption in Custom duty for capital goods imported for R&D purpose is allowed.
4. 100% exemption in excise duty on purchase of capital equipment and consumables needed for R&D purpose is allowed.
5. The in-house R&D units recognized by DSIR are also eligible for receiving funds forR&D purpose from various government departments and agencies such as DST, DBT, CSIR, ICMR, ICAR, and TDB.
6. Apart from the monetary benefits as above, In-House R&D Recognition is a prestigious accreditation for any unit for its continuous research and development of new technologies, products, process, design, quality, ranges, etc.
7. The recognition, once received is valid for 3 years from the date of receipt of the recognition. It is to be renewed again for next 3 years by a simple process of renewal.
8. This is the only scheme in the entire government set up for benchmarking the Industrial R&D.
It is well known that your Company has been involved in manufacturing and also committed to develop outstanding quality products since long time and is engaged inR&D activities such as development of new products/ technologies, improvements in process, product, design, improvement in efficiency in use of resources and other areas. This has become possible only because of your own R&D initiatives, hard core R&D team, technical personals and dedication of your team to provide the customers with the highest level of satisfaction. Your research oriented and product innovation approach seems to be never ending. In view of the same, we suggest that your Company should forward one more leap in this respect by getting the recognition for your R&D set up as an approved in-house R&D unit by the DSIR. We shall be pleased to assist and guide you and provide our services for the same.
As the R&D recognition is approved by DSIR after the various stages given above, it takes approx 3-4 months to receive the in-house R&D recognition.
Tags :Income Tax