There are two types of tax benefits available for R&D activities
  1. In Direct taxes: You can avail 100% of capital & revenue expenses which you incurred in R&D for new Product development.
  2. In IN-Direct taxes:
    1. Custom and Excise Duty will be waived off on capital equipment such as design & simulation software, proto development, validation equipment, lab furniture either imported or bought locally for R&D use
    2. Excise duty exemption on a patented product sold in India for a period of 3 years from launch (Patent should have been granted in two countries out of India, USA, Japan & any country in European Union)
    3. Once you are an approved R & D Centre, you are eligible for Grants/soft loans from the Government on Project to Project basis
    We are here talking about commercial R&D, so the main activities which are covered in R&D are:
  1. New Product development wiz a wiz the product which the company is already making, it’s not like company has to innovate some new product. New product development is like the product line which company is already producing.
  2. New Process development: the processes can be related to cost reduction of existing product. Value addition, benchmarking, reverse engineering of existing product are comes in process development.
  3. Import Substitution: if a company is developing any product which can replace, an existing imported product in the market, it’s called import substitution

The prescribe authority for providing these benefits is Department of Scientific & industrial research. It is a part of Ministry of science and technology. The Department of Scientific and Industrial Research (DSIR) has a mandate to carry out the activities relating to indigenous technology promotion, development, utilization and transfer.

Companies fully engaged in contract research are also eligible for consideration provided independent infrastructure is available for research activities. But such company can not avail the DIRECT TAX benefits.

  1. The applicant should be a company registered under companies act, 1956
  2. The company shall be eligible for consideration only after the completion of three financial years after formation.
  3. The companies seeking recognition to their in-house R&D units should be engaged in manufacture or production or in rendering technical services
The process is called “In-House R&D centre Recognition” and while you get this recognition applicant go to the “Approval” process on approval of the same you can avail the benefits of the same.
Companies which are three years old but engaged in research only at present but have plans to start manufacture at a later date may also be considered for the recognition, if there is a potential. But such companies can not avail the Direct tax benefits
If a foreign company operating in India and registered under companies act 1956 then those companies are also eligible for the recognition & approval process.
Once you apply for the recognition process it takes approximately 3 months form the application submission. Approval is granted by DSIR generally after visiting the facility by doing physical inspection of R&D centre it generally takes 4 to 5 months from Approval application submission. However the time frame is totally depend on DSIR.
  1. A consultant can provide a short-cut to know how, right specific knowledge and information for recognition & approval that does not exist in the organization
  2. Consultant can provide a professional service that does not exist in the organization, or that is needed for a specified period of time and also for the future handholding as it is a process bases certification
  3. Consultant can provide solutions to specific challenges and situations, and validate the ideas that may have already created in the organization.
  4. Consultant can facilitate crate and implement what is necessary to get the certification, can also implement specific methodology within the organization which is needed.
  5. Consultant can provide access a network of business or government contacts.
  6. Consultant can maximize the efficiency of existing team members who lacks the knowledge in the field
  7. Consultant can provide you the practical aspects of the certification process by neglecting that you cannot get the certification.
  8. In general example consultant is “a coach of a cricket team” or “a manager of a football team”,
Any manufacturing company is eligible for R&D centre recognition which is registered under companies act, 1956. However some of the companies are exempted from Approval process as per eleventh schedule
A company which is completed its 3 financial year & involved in any new product or process development is eligible for the certification
This certification is given to the facilities which are placed in India only. So if any Indian based manufacturing company wants to certify its R&D facility which is outside out India, it is not eligible. However you can avail these certifications or benefits which are available in those particular countries where your R&D facility is placed
Right stage of applying for certification is when you are in profit & going to invest Capital equipments in your R&D facility. So that you can get the R&D recognition & Approval with your existing set up, and get the benefits of future investments which you are planning to do in R&D.
No this certification is only for Manufacturing companies & provided to only in house facility of a particular company . However there are some other certifications from which you can avail the benefits for institutions, R&D labs.
No, this certification in for manufacturing companies. However there are some other certifications from which you can avail the benefits for institutions, R&D labs.

DSIR


Scinnovation Consultants Pvt. Ltd. (SCPL) is glad to share its expertise in helping a manufacturing company to extract R&D from its facilities and structure it to make it DSIR compliant and then put together the application in a seamless manner to help you avail recognition and approval.

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