Deduction for Expenditure on Scientific Research

Deduction for Expenditure on Scientific Research Scope of Scientific Research ExpenditureDeduction for Expenditure on Scientific Research 1)      u/s 43(4) scientific research means any activities for the extension of knowledge in the fields of natural or applied science including agriculture, animal husbandry or fisheries. 2)      Scientific research related to business or class of business includes any scientific research which may lead to or facilitates an extension of the business or all businesses of that class and any scientific research of a medical nature for the welfare of workers employed in that business or all businesses of that class. 3)      Expenditure on scientific research includes all expenditure for the execution of or provision of facilitites of scientific research but excludes any expenditure on acquisition of rights in or arising out of scientific research. In House Scientific Research 1)      If the assessee himself carries on scientific research and incurs revenue expenditure, such expenses are allowed as deduction, if the research relates to the business of the assessee. 2)      If any revenue expenditure of the following types is incurred before commencement of business, total of expenditure so incurred. 3)      Payment of salary to an employee engaged in scientific research. 4)      Purchase of materials used for scientific research   Capital Expenditures 1)      Any capital expenditure (other than for acquisition of land) on scientific research will be allowed as a deduction in the year in which it is incurred, if the research relates to the assessee business. 2)      If any capital expenditure is incurred before commencement of business – Similar to revenue expenditure above 3)      Where a deduction is allowed for any previous year in respect of any capital expenditures for scientific research, no deduction shall be allowed u/s 32. Other scientific research expenditures Weighted deduction for the amount contributed shall be allowed as deduction as under:- No other deduction in respect of the said contribution shall be allowed under the Act. 1)      If assessee pays any amount to a research association which has as its objects the undertaking of scientific research or to a university, college or other institution to be used for scientific research.

  • Such association, university, college or other institution is specified as such, by notification in the official gazette. Amount of deduction =175% the amount contributed.
  • Such university, association, college or other institution is specified as such. Amount of Deduction = 125%
  • If the assessee pays any sum to a National Laboratory or University or an IIT or a specified person with a specific direction that the said sum shall be used for scientific research undertaken under a programme approved in this behalf. Amount of deduction = 200%

Deduction for donation for scientific research to a company If any sum is paid to a Company which is to be used by it for scientific research and fulfills the following conditions, then weighted deduction of 125% of the sum paid would be allowed In house research and development expenses The benefit under section is available only to Cmpany assessee, engaged in any business of manufacture or production of any article or thing, other than eleventh schedule items. Section 35 (2AB) provides for weighted deduction of 200% of the expenditures incurred on in house research and development facility, including capital expenditure (Other than expenditure in the nature of cost of any land or building). Sale of assets used for scientific research If any capital asset used for scientific research is sold without having been used for any other purposes and the money’s payable, together with the amount of deduction already allowed u/s 35, exceeds the amount of capital expenditure then such excess or the amount of deduction allowed, whichever is less is taxable as business income in the year of sale. The excess of surplus over deduction allowed is taxable as capital gain. Thanks for reading for this article. Please feel free to write to us, We want to hear it all!Suggestions? Complaints? Feedback? Requests?  at [] or call us at +91 88208208 11. We would be more than happy to assist you.