The PHD Chambers of Commerce and Industry yesterday urged the government to issue a notification to permit companies to avail of reduced income tax benefits for expenses incurrred on scientific research and development as provided for in the Finance Act this year.
Issuance of such a notification would help the companies to prepare for global competition and reduce dependance on imported technology, the PHDCCI said in a representation to the Central Board of Direct Taxes.
The delay in issuance of such a notification has denied the companies benefits extended through Section 35 (2AB) of the Finance Act, the chamber noted.
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The new sub-section (2AB) was inserted in Section 35 of the Income Tax Act, 1961, to allow weighted deduction of a sum equal to one and one-fourth times of the expenditure incurred on scientific research to a company engaged in the business of manufacture of any drugs, electronic equipment, chemicals or any other article or thing notified in this regard.
However, benefits of this provision, which is applicable to R&D expenditure incurred on or after April 1, 1997 and relevant to assessment in the year 1998-99, may elude the companies, if the notification is further delayed, the chamber said.