The Hindu Business Line : Auto cos to get 150 pc I-T deduction for in-house R&D

AUTOMOBILE manufacturers can now avail themselves of 150 per cent deduction, for income-tax purposes, of the amount spent by them towards scientific research undertaken in in-house research and development (R&D) facilities.

The 150 per cent deduction would however not be available if the expenditure is incurred after March 31, 2005 or if the expenditure is towards the cost of any land or building.

The Central Board of Direct Taxes (CBDT) has now operationalised the Finance Minister, Mr P. Chidambaram's Budget announcement promising encouragement to the automobile sector. He had announced that automobile industry would be notified as an industry entitled to 150 per cent deduction of expenditure incurred on scientific research undertaken in in-house R&D facilities.

The benefit of 150 per cent deduction is not being restricted to manufacturers of automobiles alone. Even manufacturers of automotive components can claim a 150 per cent deduction of the amount spent towards scientific research undertaken in in-house R&D facilities.

A revenue department official said that automobiles, including automotive components, have been specified as an "article" for the purpose of Section 35(2AB)(1) of the Income-Tax Act, 1961.

The revenue department's move to allow 150 per cent deduction to companies engaged in the business of manufacture of automobiles and auto components is likely to further incentivise scientific research activities within the country.

The benefits of Section 35(2AB)(1) - 150 per cent deduction - are already available to companies engaged in the business of biotechnology or in the business of manufacture or production of any drugs, pharmaceuticals, electronic equipment, computers, telecommunication equipment and chemicals.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Auto cos to get 150 pc I-T deduction for in-house R&D

Zee moves SC against BCCI decision

Dalmiya blames it on Zee, ESPN

Will fans be able to catch the Australian series on TV?

Govt row with Suzuki `amicably' resolved — New facility to make only high-end cars

Securities transaction tax regime to come into effect from Oct 1

Bank of Baroda sees 10-15% drop in operating profits