Draft Income-tax Rule 30 prescribes the authority and approval process for sponsored scientific research programmes under Section 45(3)(c). For clauses (i) to (iii), the prescribed authority is the head of the concerned National Laboratory, University, or Indian Institute of Technology, while for clause (iv), it is the Principal Scientific Adviser to the Government of India. Sponsors must apply in Form No. 7, and approval is granted in Form No. 8 within two months if the programme is found feasible, for a period not exceeding five tax years. The Principal Scientific Adviser may authorise an officer not below Deputy Secretary rank to issue approval orders. A hearing opportunity must be provided before rejection. Approved programmes must exclude activities such as market research or commercial production. Separate accounts must be maintained and audited annually, with reports submitted to the jurisdictional Chief Commissioner of Income-tax. Mandatory filings include a progress report in Form No. 10 within three months of approval, a completion certificate with research findings, and audited statements within six months of completion. The authority cannot extend programme duration or approve cost escalation. Assets acquired cannot be disposed of without tax authority approval. Receipts must be issued in Form No. 9, and sponsors may apply for renewal three months before expiry. The rule establishes a structured, transparent framework for research-linked deductions.
Extract of Rule No. 30 of Draft Income-tax Rules, 2026
Rule 30
Prescribed authority and process of approval for expenditure on scientific research under section 45(3)(c).
(1) For the purposes of section 45(3)(c)(i) to (iii) of the Act, the head of the National Laboratory or the University or the Indian Institute of Technology, as the case may be, shall be the prescribed authority.
(2) For the purposes of section 45(3)(c)(iv) of the Act, the Principal Scientific Adviser to the Government of India shall be the prescribed authority.
(3) The application for obtaining approval of scientific research programme under section 45(3)(c) shall be made by a sponsor in Form No. 7.
(4) The prescribed authority shall, if he is satisfied that it is feasible to carry out the scientific research programme then, subject to other conditions prescribed in this rule, pass an order in writing, approving such programme within two months from the end of the month in which application is received in Form No. 8, to be effective for such period not exceeding five tax years.
(5) For the purposes of sub-rule (4), the Principal Scientific Adviser to the Government of India may authorize an officer who is not below the rank of a Deputy Secretary, to issue such order, after the scientific research programme has been approved by him.
6) A reasonable opportunity of being heard shall be granted to the sponsor before rejecting an application.
(7) Approval of a scientific research programme under section 45(3)(c) shall be subject to the following conditions:—
(a) The programme should not relate purely to market research, sales promotion, quality control, testing, commercial production, style changes, routine data collection or activities of a like nature;
(b) The National Laboratory, University, Indian Institute of Technology or specified person, as the case may be, shall maintain a separate account for each approved programme;
(c) The account shall be audited annually and a copy thereof shall be furnished to the Chief Commissioner of Income-tax having jurisdiction over the sponsor on or before the due date specified in section 263(1)(c) of the Act for furnishing the return of income, for each succeeding tax year;
(d) The following information/statement/report shall be submitted to the Chief Commissioner of Income-tax having jurisdiction over the sponsor:––
(A) a report in Form No. 10 by the prescribed authority within a period of three months from the date of granting approval to the programme showing progress of implementation of the approved programme and actuals of expenditure incurred thereon, by the sponsor and the National Laboratory, University, Indian Institute of Technology or specified person, as the case may be;
(B) a completion certificate along with a copy of the report on the research activities carried out and salient features of the result obtained and its further application for commercial exploitation, jointly by the sponsor and the National Laboratory, University, Indian Institute of Technology or specified person, on completion of the approved programme;
(C) a copy of the audited statement of accounts for the approved programme, by the Head of the National Laboratory, University or Indian Institute of Technology or the Principal Scientific Adviser to the Government of India, within six months of the completion of the programme.
(e) The prescribed authority shall not extend the duration of the programme or approve any escalation in costs;
(f) Assets acquired by the National Laboratory, University, Indian Institute of Technology or specified person, for executing the approved programme shall not be disposed of without the approval of the Chief Commissioner of Income-tax having jurisdiction over the sponsor.
(8) The National Laboratory, University, Indian Institute of Technology or specified person shall issue a receipt of payment for carrying out an approved programme of scientific research in Form No. 9.
(9) The sponsor, may, at least three months before the expiry of the effective period of the order passed under sub-rule (4), make an application to the prescribed authority for fresh order.
(10) For the purposes of this rule,
(a) “sponsor” means a person who makes an application in Form No. 7;
(b) “audited” means the audit of accounts by an accountant, as defined in the section 515(3)(b) of the Act. Draft Income-tax Rules, 2026 38
