Budget 2013: OPPI demands weighted deduction for expenditure incurred outside R&D unit

NEW DELHI: Given the fact that companies engaged in R&D activities do not get weighted deduction with respect to expenditure incurred outside the R&D unit, Organisation of Pharmaceutical Producers of India (OPPI) in its budget 2013 wish-list has asked for an amendment in Section 35(2AB) of I-T Act for the same.


Currently, the weighted deduction under this Section 35(2AB) is available only for expenditure on in-house R&D facility approved by the Department of Scientific and Industrial Research (DSIR).

Expenditure incurred outside the R&D units approved by the DSIR such as expenses on overseas trials, preparations of dossiers, consulting / legal fees for filings in USA for NCE (New Chemicals Entities) and ANDA (Abbreviated New Drug Applications) do not qualify for weighted deduction.

According to OPPI, an amendment should be brought in to the effect that entire expenditure in/for the purpose of an approved R&D facility which is eligible for weighted deductions and clinical trials carried out in approved hospitals and institutions outside the R&D unit are also covered within the ambit of expenditure eligible for weighted deduction.

This amendment is required as Indian companies incur substantial costs in defending their patent rights and applications in and outside India, justifies OPPI. "If such expenditure is allowed for weighted deduction, it will attract more investment in R&D activities and increase Indian participation in global clinical trials. Such expenditure is a vital part of the R&D activities," says OPPI.