Benefit under Section 35(1)(iia) should be increased to 200 per cent from the present level of 125 per cent
Issue/Justification
Section 35(2AB) of the Act has been gradually amended to provide increased tax benefits on expenditure incurred towards in-house R&D facilities i.e. from 125 per cent to 200 per cent. However, Section 35(1)(iia) of the Act, which provides tax incentives in respect of payments made to R&D company, has remained same at 125 per cent. The conditions specified by the DSIR for grant of approval for a recognized R&D facility/ company under Section 35(2AB) and Section 35(1)(iia) are the same and hence, the tax benefits provided under Section 35(1)(iia) should be at par with the tax benefits provided under Section 35(2AB) of the Act.
Suggestion
It is recommended that the tax benefits under Section 35(1)(iia) should be increased to 200 per cent from the present level of 125 per cent.
