Industry body Assocham has urged the Finance Ministry to allow 200 per cent deduction in tax computation for the expenditure on research and development of the COVID-19 vaccine in the Budget for 2021-22.
ADB said more than 14.3 million positive cases have been identified in Asia and the Pacific, causing more than 2,00,000 deaths.
Industry body Assocham has urged the Finance Ministry to allow 200 per cent deduction in tax computation for the expenditure on research and development of the COVID-19 vaccine in the Budget for 2021-22. The chamber in its pre-budget memorandum to the Finance Ministry stated that for the purpose of section 35 of the Income Tax Act, scientific research should include any research related to COVID-19.
”To encourage the taxpayers to develop a cure/vaccine against COVID-19 and to cater to the requirement for other basic drugs/any other generic medicines, a special deduction of 200 per cent of the amount expended for research including developing antidotes, any medications/ drugs and vaccinations should be introduced”, the chamber suggested. It said a 200 per cent deduction can also be provided to the donors (including nonresidents) contributing to any Indian institutions undertaking the vaccination activities.
Besides, similar deductions may be allowed for the expenditure (including capital expenditure not being expenditure in the nature of cost of any land or building) by companies for undertaking such activities. “We are expecting a big push from the Finance Minister Nirmala Sitharaman for the entire healthcare sector in the 2021-22 Budget. In our comprehensive pre-Budget memorandum, we have submitted how expenditure on development and the related aspects of vaccine manufacture, distribution and the entire medical chain should be liberally given tax incentives,” Assocham Secretary General Deepak Sood said.
The chamber also suggested that one-time benefit of deduction be provided to the companies opting for the lower tax rate under section 115BAA of the Act, at least for a minimum period of two financial years. It said presently Section 35 provides for 100 per cent deduction of expenditure incurred on scientific research. The chamber argued that while a final vaccine for COVID-19 is some time away, the Indian institutions and companies are also moving full steam ahead with their respective technologies.
“Thus, it is important to provide incentives and tax deductions to those who are investing their money in invention or conducting research towards cure of Covid-19 and also to combat any other unforeseen circumstances due to such a pandemic,” it said. The Budget 2021-22 is likely to be presented on February 1.