ThinkStock PhotosThe Central Board of Direct Taxes Tuesday notified Haridwar-based Patanjali Research Foundation Trust as an approved research association, for a period of five years.
The notification will allow businesses contributing any amount to the foundation for scientific research to claim the expense as tax deductible.
The Board said the notification will apply from assessment year 2022-23 till 2027-28.
Experts said tax breaks in the form of deduction of expenses incurred for specified purposes, channelizes the funds of the taxpayers in the desired area of investment, that is scientific research in this case.
"India understands that investment in research and development is the key to economic growth and a step towards self-reliance. Therefore, in addition to increasing government funding on research associations, the government wants to encourage the private sector participation in R&D spending as well," said Neha Malhotra, director at Nangia Andersen LLP.
In computing the income under head business and profession, a taxpayer is permitted to deduct any amount paid to an approved scientific research association for undertaking scientific research. The amount or expense is eligible for claim as deduction from business income under section 35 of the Income Tax Act. Such contributions reduce tax outgo of a business.
The provision under Section 35 of the Act serves as tax incentive for the taxpayer spending on scientific research and source of funds for the research association, experts added.
The notification will allow businesses contributing any amount to the foundation for scientific research to claim the expense as tax deductible.
The Board said the notification will apply from assessment year 2022-23 till 2027-28.
Experts said tax breaks in the form of deduction of expenses incurred for specified purposes, channelizes the funds of the taxpayers in the desired area of investment, that is scientific research in this case.
"India understands that investment in research and development is the key to economic growth and a step towards self-reliance. Therefore, in addition to increasing government funding on research associations, the government wants to encourage the private sector participation in R&D spending as well," said Neha Malhotra, director at Nangia Andersen LLP.
In computing the income under head business and profession, a taxpayer is permitted to deduct any amount paid to an approved scientific research association for undertaking scientific research. The amount or expense is eligible for claim as deduction from business income under section 35 of the Income Tax Act. Such contributions reduce tax outgo of a business.
The provision under Section 35 of the Act serves as tax incentive for the taxpayer spending on scientific research and source of funds for the research association, experts added.
Read More News on
Download The Economic Times News App to get Daily Market Updates & Live Business News.