To give a fillip to the country's lagging R&D sector, the Budget proposes to incentivise corporate spending on in house research by providing more tax sops.
"In order to further incentivise the corporate sector to invest in inhouse research, it is proposed to increase the weigthed deduction from 150 per cent to 200 per cent," the Budget said.
The companies involved in the pharmaceutical sector, advance and precision engineering would stand to benefit from the new provisions.
Besides, deductions under the Income tax Act from the business income on the contributions made to a national laboratory, a university or an IIT has also been increased to 175 per cent.
"In order to encourage more contributions to such approved entities for the purposes of scientific research, it is proposed to increase this weighted deduction from 125 per cent to 175 per cent," the Memorandum to the Finance Bill 2010 said.