Amendment of section 35.
15. In section 35 of the Income-tax Act, with effect from the 1st day of April, 2018,-
(i) in sub-section (1),-
(a) in clause (ii),-
(I) for the words “one and three-fourth”, the words “one and one-half” shall be substituted;
(II) after the proviso, the following proviso shall be inserted, namely:-
“Provided further that where any sum is paid to such association, university, college or other institution in a previous year relevant to the assessment year beginning on or after the 1st day of April, 2021, the deduction under this clause shall be equal to the sum so paid;”;
(b) in clause (iia), the words “an amount equal to one and one-fourth times of” shall be omitted;
(c) in clause (iii), the words “an amount equal to one and one-fourth times of” shall be omitted;
(ii) in sub-section (2AA),-
(A) in clause (a), for the words “two times”, the words “one and one-half times” shall be substituted;
(B) after the proviso and before Explanation 1, the following proviso shall be inserted, namely:-
“Provided further that where any sum is paid to such National Laboratory or university or Indian Institute of Technology or specified person in a previous year relevant to the assessment year beginning on or after the 1st day of April, 2021, the deduction under this sub-section shall be equal to the sum so paid.”;
(iii) in sub-section (2AB),-
(a) in clause (1), for the words “two times”, the words “one and one-half times” shall be substituted;
(b) after clause (1) and before the Explanation, the following proviso shall be inserted, namely:-
“Provided that where such expenditure on scientific research (not being expenditure in the nature of cost of any land or building) on in-house research and development facility is incurred in a previous year relevant to the assessment year beginning on or after the 1st day of April, 2021, the deduction under this clause shall be equal to the expenditure so incurred.”;
(c) clause (5) shall be omitted.
Notes on Clauses:
Clause 15 of the Bill seeks to amend section 35 of the Incometax Act relating to expenditure on scientific research.
Sub-clause (i) of the said clause seeks to amend sub-section (1) of the aforesaid section 35.
Clause (ii) of sub-section (1) of the said section provides for weighted deduction to the extent of one hundred seventy-five per cent. of any sum paid to a scientific research association which has the object of undertaking scientific research or to a university, college or other institution to be used for scientific research.
It is proposed to amend the said clause (ii) so as to reduce the said weighted deduction from one hundred seventy-five per cent. to one hundred fifty per cent. from financial year 2017-2018 to 2019-2020. It is further proposed to reduce the said weighted deduction to one hundred per cent. from the financial year 2020- 2021 and subsequent years.
Clause (iia) of sub-section (1) of the said section provides weighted deduction in respect of contribution to a company engaged in scientific research.
It is proposed to amend the said clause (iia) so as to reduce the said weighted deduction from one hundred twenty-five per cent. to one hundred per cent. from financial year 2017-2018 and subsequent years.
Clause (iii) of sub-section (1) of the aforesaid section provides that weighted deduction shall be allowed in respect of contributions made to an approved university, college or institution to be used for research in social science or statistical research.
It is proposed to amend the said clause (iii) so as to reduce the said weighted deduction from one hundred twenty-five per cent. to one hundred per cent. from financial year 2017-2018 and subsequent years.
Sub-clause (ii) of the said clause seeks to amend sub-section (2AA) of the aforesaid section 35.
The existing provisions contained in clause (a) of sub-section (2AA) of the said section provide for a weighted deduction to the extent of two hundred per cent. of any sum paid to a National Laboratory or a University or an Indian Institute of Technology or a specified person for the purpose of an approved scientific research programme.
It is proposed to amend the said clause (a) so as to reduce the said weighted deduction from two hundred per cent. to one hundred and fifty per cent. from financial year 2017-2018 to 2019-2020. It is further proposed to reduce the said weighted deduction to one hundred per cent. from financial year 2020-2021 and subsequent years.
Sub-clause (iii) of the said clause seeks to amend sub-section (2AB) of the aforesaid section 35.
The existing provisions contained in clause (1) of sub-section (2AB) of the said section provide for weighted deduction of two hundred per cent. of the expenditure incurred by a company or scientific research on an approved in-house research and development facility.
It is proposed to amend the said clause (1) so as to reduce the said weighted deduction from two hundred per cent. to one hundred and fifty per cent. from financial year 2017-2018 to 2019-2020. It is further proposed to reduce the said weighted deduction to one hundred per cent. from financial year 2020-2021 and subsequent years.
These amendments will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018- 2019 and subsequent years.
