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R&D Oriented Tax Advisory

Leveraging Existing Policies/Schemes For R&D Tax/Expenditure Relief

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350+
Practitioners Worldwide
20+
Years of IP Excellence
15+
Jurisdictions Covered
3
Core Filing Strategies
R&D Oriented Tax Advisory | India R&D Tax Incentives & Expenditure Relief | IIPRD
ISO 9001:2015 Certified Practice

R&D Oriented Tax Advisory

Leverage India's R&D tax and expenditure relief

Existing policies and schemes for R&D tax and expenditure relief, put to work

For Indian entities and global corporations with R&D operations in India, research expenditure is a large share of overall cost. Relief exists, but many entities miss it, whether from lack of time, unclear guidance, or limited understanding of the policy framework, and end up paying more tax than due or forgoing available benefits. IIPRD helps you find and realize the relief you are entitled to.

Startup IndiaDSIR & GST ReliefIncome Tax DeductionsResearch GrantsState IncentivesCustoms & GST
350+Practitioners worldwide
20+Years of IP excellence
15+Jurisdictions covered
150%Weighted R&D deduction
The opportunity

Relief that is available, but often unclaimed

Numerous schemes let R&D-oriented entities save on taxes, optimize expenditure, and access loans, grants, and credits. The challenge is navigating them and claiming them in full.

This advisory brings more clarity on the available provisions, but taking full leverage still calls for objective assessment and efficient execution.

The path from expenditure to realized savings is consistent: identify the applicable provisions, apply and document correctly, then follow through to realization.

R&D expenditureEquipment, trials, filings
Identify provisionsSchemes & sections
Apply & documentRegistration & filing
Realize savingsDeductions & credits

An attractive, aligned engagement

Some engagements can be structured around the savings achieved. Where a professional works for a share of the overall savings, the entity does not compensate separately but only as a percentage of what it actually saves.

Startup India Action Plan (DPIIT)

A key opportunity for new entities

One of the most popular schemes, run by the Department for Promotion of Industry and Internal Trade, offers recognized startups several tax exemptions and IP incentives.

Section 80 IAC

Three-year tax holiday

Recognized startups can claim a tax holiday for three consecutive financial years within the first ten years since incorporation.

Section 56

Share-premium exemption

Exemption is available provided paid-up share capital and share premium do not exceed INR 25 Crore after the proposed issue of shares.

SIPP scheme

Cost-effective IP protection

Startups bear only reduced statutory fees for patents, designs, and trademarks; professional fees to government-appointed facilitators are paid by the government.

Eligibility at a glance
TenureWithin ten years from the date of incorporation or registration.
StructureA private limited company, partnership firm, or limited liability partnership in India.
TurnoverTurnover should not exceed INR 100 Crore in any financial year since incorporation.
InnovationWorking towards innovation or improvement of products, processes, or services, or a scalable model with high potential for employment or wealth creation.
ExclusionsEntities formed by splitting or reconstructing an existing business do not qualify.
Other government-backed schemes include reduced-interest bank loans (for example via SIDBI), support for IP protection outside India (for example via BIRAC and MEITY), and various industry-specific cooperation schemes.
DSIR-recognized centres

Tax, GST, and customs relief for R&D units

Entities registered with the Department of Scientific and Industrial Research enjoy customs-duty exemptions on R&D goods and significantly subsidized GST rates.

5%

Imports & interstate purchases

Concessional GST on eligible R&D goods.

2.5% + 2.5%

Intrastate purchases

2.5% CGST along with 2.5% SGST.

  • 150% weighted deduction on R&D expenditure under Section 35(2AB) for chemical, pharmaceutical (including clinical trials), biotechnology, electronics, computers, telecommunications, and aviation.
  • Duty-free imports for in-house R&D units in the pharmaceutical and biotechnology sectors, subject to conditions.
  • Customs-duty exemptions on equipment, consumables, computer software, and prototypes essential for R&D.
  • Write-off of both revenue and capital expenditure on R&D.
  • Weighted deduction on sponsored research with national laboratories, universities, and IITs.
  • Accelerated depreciation on plant and machinery set up with indigenous technology.
  • Excise-duty waiver for three years on goods based on patented indigenous technologies.
  • Ten-year tax holiday for commercial R&D companies approved by DSIR before 1 April 2004.
Income Tax Act, 1961

Key tax provisions at a glance

The sections most relevant to R&D-oriented entities, and the relief each one provides.

Section
Relief
Key detail
80 IAC
Startup tax holiday
Three consecutive financial years within the first ten years since incorporation.
56
Share-premium exemption
Available where paid-up capital and share premium do not exceed INR 25 Crore.
35(2AB)
Weighted R&D deduction
In-house R&D expenditure, including clinical trials, approvals, and patent filing; 150%, phasing to 100% after March 2020.
115BBF
Patent box
Royalty on a patent granted in India, to a resident true and first inventor, taxed at 10%.
10AA
SEZ deduction
100% of export profit for the first five years, 50% for the next five, then up to 50% with a reinvestment reserve.
Under Section 35(1) and 35(2), a 100% deduction is available on revenue and capital expenditure on scientific research in the year incurred (no depreciation on that capital, and land is excluded). Expenses in the three years before a business starts are also eligible.
Research grants & state incentives

Funding beyond tax relief

Government boards and bodies grant loans and funding to research entities, and states add investment-linked and location-linked incentives.

TDB

Technology Development Board

Support through a loan of up to 50% of project cost at simple interest, equity participation up to 25% of paid-up capital, and grants-in-aid.

TePP · DSIR

Techno-entrepreneurs Promotion

The Techno-entrepreneurs Promotion Programme, handled by DSIR, supports individual innovators and entrepreneurs.

NMITLI · CSIR

Millennium Technology Initiative

The New Millennium India Technology Leadership Initiative, supported by CSIR, backs high-potential technology development.

Many state-level policies offer investment-linked and location-linked incentives, including stamp-duty waivers and concessions, soft loans, and subsidies linked to social-security contributions. R&D companies are eligible to apply, and terms vary by state, with customization for mega projects or investment in underdeveloped areas.
The IIPRD offering

Full-spectrum support, not just advice

Backed by a team of legal and regulatory professionals, including company secretaries, IIPRD helps R&D-oriented entities realize the benefits they are entitled to, end to end.

Advisory services

Detailed guidance on the tax-saving schemes, loans, grants, and credits available for R&D.

Documentation & registration

Assistance with all paperwork and registration processes, completed accurately and on time.

Follow-up & monitoring

Ongoing support to monitor applications, conduct follow-ups, and resolve issues promptly.

Single point of contact

For multiple schemes at once, one dedicated team coordinates all applications and communications.

Proprietary data tools

Managed through one integrated system

IIPRD uses proprietary data-extraction and management tools so that no opportunity is missed and benefits are realized efficiently.

Apply to multiple schemesAll applications managed together, simultaneously.
Monitor in real timeLive status updates to act proactively.
Ensure realizationTransparent, organized processes to timely benefits.