Pharmaceutical Department has recommended to the Department of Revenue a number of measures including hiking the benefit of weighted exemption to companies engaged in research and development with a view to scale up their overall spending in research activities in the country.
The department is learnt to have suggested extending the benefit of 100 per cent deduction from income tax to the companies carrying out scientific research and development under Section 80-1B(8A) of the Income Tax Act for more years. The benefit is given to the companies approved by the Department of Science and Industrial Research (DSIR) and the Pharma Department wants the scheme to be extended upto 2017, sources said.
The section at present is open only for the Indian companies. With a view to woo more foreign research firms to India as a favourite destination for global research, the pharma department recommended to the Revenue Department to include foreign firms also under the provision.
Another recommendation is to raise the benefit of weighted exemption under Section 35(2AB) of the Income Tax Act from the current 150 per cent to 200 per cent to encourage pharmaceutical innovation research and development. Besides, the Department suggested that the scheme which is valid only upto 2012 should be extended by another five years to 2017.
The department also asked the Revenue department to expand the coverage of the Section of weighted exemption to include the expenditure incurred for 'obtaining regulatory approvals and filing of patents abroad'. The department has forwarded these recommendations on the request of different pharmaceutical associations in the past during the interactions and also by way of representations.
In fact, some of these recommendations were made before the last Union Budget itself and the industry was hoping for the hike in the benefit of weighted exemption. However, it was not included in the budget proposals. Sources said the pharma department will be pressing for these set of proposals this time well ahead to be announced in the next budget at least and thereby give a boost to the research activities in the country.