The Union Budget 2006-07 has made sure that the proposed pharma parks on the lines of special economic zones are getting all existing tax benefits. The budget proposes an extension to such tax benefits for another three years.
The budget memorandum has suggested an amendment to clause (iii) of sub-section (4) of section 80 to make sure that the time limit for tax benefits are extended from 31.3.2006 to 31.3.2009. The amendment is to take effect from 1st April, 2007 and will, accordingly, apply in relation to the assessment year 2007-2008 and subsequent years. The government decision has brightened the prospects of future pharma parks that are being planned in the country.
The Section 80 IA of the Income Tax Act provides for deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. Clause (iii) of sub-section (4) of the said section provides that an undertaking which develops, develops and operates or maintains and operates an industrial park or special economic zone notified by the Central Government in accordance with the scheme framed and notified by it for the period beginning on 1st April, 1997 and ending on 31st March, 2006, is eligible for deduction under the said section.
As Pharmabiz had reported, the Union Ministry of Chemicals and Fertilizers has already invited expression of interest for setting up 25 integrated pharma parks with world-class infrastructure over next five years. The ministry plans talk about separate parks for bulk drugs and formulations where 40% of cost of each park, up to Rs 40 crore can be provided by the government.