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Application to DSIR

The company has to make an application to Department of Scientific and Industrial Research for grant of recognition and registration to its in-house R&D units. Following Criteria will be adopted by DSIR for Recognition of R&D unit 1. The Company must spell out a long term R&D policy which should be displayed prominently in the inhouse R&D unit. 2. R&D activities should be separate from routine activities of the firm, such as, production and quality control. 3. The units should have qualified staff exclusively engaged in R&D and should be headed by a full-time qualified & experienced R&D person

The following activities shall be not treated as R&D:Market Research.

Operation & Management research.

Testing & analysis of routine nature of operation Process control Quality control and maintenance of day to day production. Work and methods study. .

Table of Contents:Executive summary

Stage I:- Application to DSIR.

Stage II:- Application to Income tax department.

Other Benefits.

Executive summary.
Company has to apply to DSIR for grant of recognition and registration of in-house R&D facility.
Once a company is granted recognition by DSIR, it has to apply to Income Tax authorities for approval to get deduction u/s 35 (1) of Income tax Act, 1961. Excise duty exemption with certain conditions. Financial support by government.

STAGE II: Approval form Income Tax authorities

1. Only companies having in-house R&D centre(s) recognised by DSIR are eligible to make application for approval under section 35 (2AB) of the Income Tax Act. 2 . Procedure and guidelines for approval under section 35 (2AB) of the income tax act are available on DSIR website and

Benefits under Income Tax Act.

The following Expenditure incurred for in-house research shall be allowed as deduction: Revenue Expenditure Sec 35(1)(i): 100% of the current year Revenue Expenditure is allowed as deduction. Capital Expenditure Sec 35(1)(iv) : 100% of Capital Expenditure other than land is allowed as deduction.

Note :Depreciation cannot be claimed on the capital Expenditure which was allowed as deduction u/s 35(1)(iv). Weighted deduction @ 200% is not available in respect of expenditure incurred after 31-3-2012.