Under the existing provisions contained in clause (1) of sub-section (2AB) of section 35 of the Income-tax Act, a company engaged in the business of manufacture or production of any drugs, pharmaceuticals, electronic equipments, computers, telecommunication equipments, chemicals or any other article or thing notified by the Board is allowed a deduction of sum equal to one and
one-half times of the expenditure incurred on scientific research ( not being expenditure in the nature of cost of any land or building) on in-house research and development facility, as approved by the prescribed authority.
With a view to give further boost to research and development activities and provide impetus to economic growth, it is proposed to provide that the weighted deduction on expenditure for research and development shall also be available for the business of bio-technology. It is further proposed to provide that for the purpose of the said sub-section, expenditure on scientific research shall include expenditure on clinical trial, regulatory approval and filing patent.
The amendment is effective from 1st. April 2002 and accordingly, is applicable from the assessment year 2002-2003 and subsequent years.