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Q.

Industries need to modernize / upgrade their technologies to sustain This will involve great R & D efforts and huge expenditure due to this. Should such R & D expenditure be given full tax exemption to encourage the R&D efforts in the country? Your views?

Asked by Good Citizen, 01 Apr '10 01:28 pm
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Answers (3)

 
1.

Various Incentive measures are already in place for encouraging inhouse R&D activities...But, if a close look at the R&D activities are taken, it can be easily understood that most of the expenditure shown as spent on R&D activities by the Companies are actually expenditure incurred by the Companies on activities not related to the R&D wing, but booked under R&D expenditure, to avail of the vast incentives provided for shoring up R&D activities. Companies usually find it more attractive and profitable to acquire the latest technology/know-how from abroad, instead of investing money and time on inhouse R&D efforts. In such companies, th R&D efforts remain on paper only. (I remember the surprise inspection conducted by the Income Tax Dept to verify the genuineness of the huge amountsshown as spent on R&D by one of the top Electronics and white goods manufacturing companies of yester years..An oscilloscope (not a very expensive instrument ) was the only gadget that could be seen in a "w ...more
Answered by thampy chacko, 01 Apr '10 02:09 pm

 
  
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2.

Deductions are allowed as direct tax exemption, tax deduction, or tax-base deduction. A variety of tax incentive programmes are available for such R&Dactivities as training technicians, purchasing experimental devices and samples,employing foreign personnel, and building research albs. Further, as an indirect incentive scheme, special depreciation is allowed for assets invested in R&D.
Answered by venkatesaldevarajan, 01 Apr '10 01:44 pm

 
  
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3.

Yeah. You are right. In fact government has already been providing many incentives to industry to invest in R&D. In house R&D centers of the companies can avail the benefit of 200% of the total expenditure both revenue and capital expenditure weighted deduction in income tax for 3 years & more, duty free import of specified goods, 10 years tax holiday for commercial R&D, excise duty waiver for 3 years etc. I believe that such incentives shall be tied to the output and performance. There shall be a responsibility of the part of the industry for availing the tax payers money.
Answered by Tony Fernandez, 01 Apr '10 01:44 pm

 
  
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