Department of Scientific & Industrial Research
regulatory services
NKG Provides Consulting Services for Recognition under Department of Scientific & Industrial research to Help companies apply for Tax Benefits by having In house recognitions.
introduction to
Department of Scientific & Industrial Research
The primary endeavor of DSIR is to promote R&D by the industries, support a larger cross section of small and medium industrial units to develop state-of-the art globally competitive technologies of high commercial potential, catalyze faster commercialization of lab-scale R&D, enhance the share of technology intensive exports in overall exports, strengthen industrial consultancy & technology management capabilities and establish user friendly information network to facilitate scientific and industrial research in the country.
application for
RECOGNITION / RENEWAL OF RECOGNITION OF IN-HOUSE R&D UNIT(S) UNDER SECTION 35 2(AB)
In order to encourage R&D initiatives by industry, and to make R&D an attractive proposition, the Finance Bill 1997 introduced a sub-section (2AB) in Section 35 of the IT Act 1961. Amended text of this subsection can be seen at Annexure-I of these guidelines. This subsection provides for weighted tax deduction of a sum equal to two times of any expenditure incurred on scientific research (not being expenditure in the nature of cost of any land or building) in certain areas specified by section 35(2AB) of IT Act, by companies on in-house R&D centres, approved by the ‘Prescribed Authority’.
Where a company engaged in the business of bio-technology or in any business of manufacture or production of any article or thing, not being an article or thing specified in the list of the Eleventh Schedule] incurs any expenditure on scientific research (not being expenditure in the nature of cost of any land or building) on in-house research and development facility as approved by the prescribed authority, then, there shall be allowed a deduction of a sum equal to [two] times of the expenditure so incurred.
Who is the Prescribed Authority
Secretary, DSIR has been designated as the ‘Prescribed Authority’ for purposes of Section 35(2AB) of I.T. Act, as per rule 6(1B), inserted vide Government of India, Department of Revenue’ Notification S.O 259(E) dated 27th March 1998 (fifth amendment rules), effective from 1st day of April 1998.
Eligibility Criteria
Companies having In-house R&D centers, which satisfy the following conditions, are eligible to apply for approval of the ‘Prescribed Authority’:
- The applicant should be a company registered under the Companies Act, 1956 or 2013.
- The company shall be eligible for consideration only after the completion of three financial years after formation.
- The applicant should have a regular source of income at least during the last two years to sustain the business and this needs to be elaborated in the application.
- The companies seeking recognition to their in-house R&D units should be engaged in manufacture or production or in rendering technical services.
- Companies fully engaged in contract research are also eligible for consideration provided independent infrastructure is available for research activities. Those engaged in research only at present but have plans to start Page | 2 manufacture at a later date may also be considered for the recognition, if there is a potential.
- The R&D unit(s) should not be located in residential areas but should be operating in premises authorized by the relevant Central/State Government. (Proof for such authorization needs to be furnished).
- Independent infrastructure for research activities and adequate technically qualified manpower should be available (Minimum area for the R&D activities should be at least 1000 Sq. ft.).
- At the time of application, the R&D unit(s) should be functional and should have well defined, time-bound R&D programmes leading to development of innovative products and/or technology(ies).
Process for Submission
Application to DSIR has to be submitted Online on the portal http://dsir.csir.res.in/DSIRPrograms/Login/Default.aspx and In Hard copy at DSIR , New Delhi for approval in Form 3CM and Submission of Report in Form 3CL.
After successful submission of online application send one set of hard copy (PDF, generated by the system) signed by the MD/whole-time Director of the company to DSIR along with all uploaded annexures
checklist of documents required for
Approval in Form 3CM
- Application in Income Tax prescribed Form 3CK giving address of each in-house R&D centre recognised by DSIR duly signed by Managing Director and witness.
- Copy of DSIR recognition letter for each of in-house R&D centre.
- Clearly defined objectives of R&D not exceeding 6 lines.
- Latest audited financial statement along with annual report.
- Additional information as per annexure – I of the guidelines (page 18).
- Additional information as per Annexure-III for seed companies.
- One page write-up clearly summarising the R&D activities taken up separately at each of the R&D centre/s recognised by DSIR.
- Confirmation that the company does not manufacture any product listed in Schedule 11 of IT Act.
- Total capital cost of in-house research facility, given break up of expenditure of complete research facility including cost of equipment, land & building as on 31st March of last completed financial year.
- An undertaking that the company shall reflect the capital and revenue expenditure on R&D in the schedules / notes to accounts in the audited financial statement of the company prepared for the purpose of published annual report as well as for the purpose of Income Tax returns.
- A commitment that the company shall submit the desired information as per Annexure II & Annexure III (Section-C) of DSIR Guidelines (pages 26 to 33) every year for the approved period while filing the Income Tax returns.
checklist of documents required for
Extension of approval in Form 3CM
- Income Tax prescribed Form 3CK giving address of each in-house R&D centre recognized by DSIR duly signed by Managing Director and witness.
- Copy of recognition / renewal of recognition letter issued by DSIR.
checklist of documents required
submission of Report in 3CL
Report in Form 3CL has to be submitted by 31st October of each succeeding year of approved period.
- Complete details/documents as per Section C of DSIR guidelines (along with desired breakup of capital & revenue expenditure claimed for weighted deductions)
how can we help?
NKG experts have a good track record and sound experience in understanding the steps and processes of successful submission and approval of Applications with DSIR as well as efficient tracking of testing procedure and issuance of test reports.
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