Tabulation of expenditure incurred on scientific research under section 35 of Income Tax Act 1961- Paid to research association having object of under taking scientific research or university, college or other institutes to be used for scientific research , Paid to research association having object of under taking scientific research or university, college or other institutes to be used for social science or statistical research, Paid to National Laboratory or a University or an Indian Institute of Technology, Other specified persons and Company engaged in business of bio-technology or manufacture of articles (not being in 11th Schedule)

Tabulation of expenditure incurred on scientific research u/s 35 of ITA

Nature of expenditure claimed
Applicable section
%age of deduction
Applicant
Approval required for
Prescribed authority for approval
Approval application in form
Approval granted in form
Paid to research association having object of under taking scientific research or university, college or other institutes to be used for scientific research
35(1)(ii)
150% till FY 19-20 &  100% thereafter
Research association, university, college or other institutes
grant of approval, or continuance thereof, u/s 35(1)(ii)
Notified in official gazette by Central Government
By research association (3CF-I)
University, college of institution (3CF-II)
Paid to research association having object of under taking scientific research or university, college or other institutes to be used for social science or statistical research
35(1)(iii)
150% till FY 19-20 &  100% thereafter
Research association, university, college or other institutes
grant of approval, or continuance thereof, u/s 35(1)(iii)
Notified in official gazette by Central Government
By research association (3CF-I)
University, college of institution (3CF-II)

Section 35(1)(i) allow deduction for any expenditure (not be of capital nature) laid out or expended on scientific research related to the business in nature of salary of person engaged in such research or acquisition of material required for such research.

Section 35(1)(iv) allow deduction for any capital nature expenditure laid out or expended on scientific research related to the business then whole of such expenditure is allowed as deduction in year of expenditure. No depreciation u/s 32(1)(ii) allowed as deduction on such capital expenditure

Expenditure incurred up to 3 years prior to commencement of business is allowed in year of commencement of business, such expenditure need to be certified by Director General (Income-tax Exemptions) in concurrence with the Secretary, Department of Scientific and Industrial Research, Government of India

Paid to National Laboratory or a University or an Indian Institute of Technology
35(2AA)
150% till FY 19-20 &  100% thereafter
Company (Sponsor)
Research programme under taken by National Laboratory or a University or an Indian Institute of Technology
Head of the National Laboratory or the University or the Indian Institute of Technology
3CG
3CH
Other specified persons
35(2AA)
150% till FY 19-20 &  100% thereafter
Company (Sponsor)
Research programme under taken by such specified person
Principal Scientific Adviser to the Government of India
3CG
3CH
Other conditions

1. Prescribed authority submit its findings in prescribed form to Principal commissioner, commissioner, principal director general, director general(such IT officials), on feasibility of such scientific research within 3 months of granting approval to the programme

2. 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

3. Sponsor and such institutes to submit an yearly statement showing progress of implementation of the approved programme and actuals of expenditure incurred thereon to jurisdictional such IT officials of the sponsor, further it shall maintain a separate account for each approved programme ; which shall be audited annually and a copy thereof shall be furnished to such IT officials by 31st October of each succeeding year

4. On completion of the approved programme, 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 shall be jointly submitted by the sponsor and such institutes to such IT officials

5. copy of the audited statement of accounts for the approved programme shall be submitted by the Head of such institute to such IT officials within 6 months of completion of programme

6. Disposal of assets acquired require approval of such jurisdictional IT official

7. prescribed authority shall not extend the duration of the programme or approve any escalation in costs

Company engaged in business of bio-technology or manufacture of articles (not being in 11th Schedule)
35(2AB)
Company claiming deduction
in-house research and development facility of the company
Principal Scientific Adviser to the Government of India
3CK
3CM
Other conditions

1. Prescribe authority electronically submit report in Part A & B of form 3CL. Part A to provide detail of approval and Part B quantify expenditure incurred on in-house R&D facility in previous year to such jurisdictional IT officials in 120 days of grant of approval

2. No deduction will be allowed under any other provision of IT Act

3.  The facility 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

4. The company to maintain separate accounts for each approved facility, to be annually audited, audit report in form 3CLA be submitted to prescribed authority before due date of return u/s 139(1)

Thank you for the patient reading. Hope this document to be relevant. For feedback or comments, may please write to madan.sanjiv@gmail.com

{Disclaimer: This document had been written to provide Income Tax provisions in a simple manner.  The author shall not be responsible for any of the decision made based on the contents of this document.}

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