Hyderabad, Feb. 27
The biotechnology industry, under the aegis of Federation of Indian Chambers of Commerce and Industry (FICCI), has urged the Union Finance Ministry to allow deductions to companies carrying on scientific R&D approved by the prescribed authority till April 2010, against March 2007 currently.
According to the FICCI Biotechnology Committee Chairman, Dr Krishna M. Ella, there is a need to extend the benefit of weighted deduction for 10-15 years.
The measure would greatly help in increased R&D activity in the country in biotechnology and pharma sectors and help the country become a recognised R&D centre of the world.
"In Canada, Germany, and the UK, the Government provides up to 35 per cent grant on research. Here, the weighted deduction allowed is getting a tax advantage of only 7-8 per cent. FICCI proposes that new biotech inventions or products manufactured for the first time in India should be given tax exemption for at least two years after the commercial launch of the product," Dr Ella told
Business Line. In terms of Section 80-IB (8A), any company carrying on scientific R&D is allowed a deduction of 100 per cent of the profits of such business for a period of 10 consecutive assessment years, if the company is for the time being approved by the prescribed authority after March 31, 2000 but before April 1, 2005.
FICCI wants the expenditure incurred on patents filed in India and abroad by companies to be treated as R&D expenses.
Customs duty exemption on capital goods and raw materials should be extended to all biotechnology companies engaged in R&D, irrespective of the fact whether they are funded by the Government or not.
Reduction in Customs duty should be extended to all the equipment used by the biotechnology sector.