Increase the DSIR recognition associated income tax benefit back to 200%!!

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The DSIR (Department of Scientific and Industrial Research) provides 'In-House R&D' recognition to manufacturing companies and software product companies for carrying out R&D activities. The recognition is aimed at inculcating the culture of innovation and R&D in India.

 The R&D activities as per the DSIR guidelines are one of the following:

 

  • New product development
  • New process development
  • Import substitution
  • Cost reduction

 

The recognition also has a lot of financial benefits associated with it including a 150% weighted income tax reduction(u/s 35(2AB) of Income Tax Act). This tax reduction, however, used to be 200 percent from April, 2014 till April, 2017. This decrease in the tax benefits has been a very counterrevolutionary step and is almost ironical to concept of 'Make In India'. To make India a manufacturing hub we need an extra push compared to other countries including the giant China (almost all the developing and developed nations have similar R&D incentive schemes) which are already ahead of us.  

Recently, a Standing Committee has also suggested NITI Aayog to reconsider the decision of reducing the tax benefits to 150 percent last year and to increase the same back to 200 percent. The government needs to realize that decreasing the tax benefits nullifies the very idea that was behind the recognition: to instill and propagate a culture of R&D and innovation! The more the tax benefits are the more the industries feel encouraged to start or expand their R&D. 

We, the people, request the government to increase the income tax benefits back to 200%!!!

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