A research report by accounting and consulting firm Deloitte has stated that the research & development investment regime in India could be made more robust and attractive by providing more incentives.
The report states that while India does have a beneficial R&D regime, it could improve the landscape by providing ‘higher super deduction’, government grant for research & development in priority sectors, extending the benefits to all industries, carryover of unabsorbed R&D losses for extended period of time and continuing R&D benefits.
According to the report, many countries offer generous incentives to encourage R&D, and investments in innovation to bolster the growth of R&D in their respective countries. At times, the availability of incentives for R&D would be the key factor in determining the destination for setting up R&D centres. Further, the benefits arising out of R&D are effectively leveraged while strategising Intellectual property migrations and business development strategies.
“R&D incentives vary from country to country in terms of the mechanics of making a claim, the level of benefit available and the approach adopted by the tax authorities in reviewing the claims for relief. Although the basic definition of R&D is similar in most countries, there are variations in country-specific taxation legislation and incentive regimes.
In some countries, the level of incentives is lucrative with no restrictions on the location of IP etc while others offer just basic incentives,” the report noted which details research of R&D landscape fom around 19 countries.
Detailing how various countries structure incentives, the report notes that the benefits are delivered through a reduction in taxes payable or, in some countries where the credit provided cannot be used to offset tax payable due to losses, via a cash payment.
A key factor is that the differences in the detail of the regimes and their interaction often present opportunities for companies to take full advantage of their global structure.
