Yes, you can apply for the surrender of your GST registration if you no longer meet the eligibility criteria or if you wish to discontinue your GST compliance. Here’s what you need to know: Eligibility for Surrender:If your business turnover falls below the threshold, or if you are no longer engagedRead more
Yes, you can apply for the surrender of your GST registration if you no longer meet the eligibility criteria or if you wish to discontinue your GST compliance. Here’s what you need to know:
Eligibility for Surrender: If your business turnover falls below the threshold, or if you are no longer engaged in any taxable activities, you may opt to surrender your GST registration.
Relevant Provisions: Under the CGST Act, provisions allow taxpayers to voluntarily surrender their GST number. This process is intended to help businesses avoid unnecessary compliance if they are no longer required to be registered.
Procedure to Surrender Your GST Number:
Log in to the GST Portal: Access your account on the official GST portal.
Submit an Application: Fill out the form for cancellation/surrender of registration, providing the required details and reasons.
Compliance Check: Ensure that all pending returns are filed and any outstanding tax liabilities or refunds are settled.
Confirmation: Once your application is processed, you will receive confirmation that your GST registration has been surrendered.
Important Reminder: Surrendering your GST number means you can no longer collect GST on your sales or claim input tax credits. Make sure this is the right step for your business before applying.
If you fail to file your GST return by the due date, you can incur a penalty under the GST law. Here’s a straightforward explanation: 1. Daily Penalty: General Taxpayers:You may be charged a penalty of ₹50 per day for each day the return is late. Small Taxpayers:If your aggregate turnover is up to ₹Read more
If you fail to file your GST return by the due date, you can incur a penalty under the GST law. Here’s a straightforward explanation:
1. Daily Penalty:
General Taxpayers: You may be charged a penalty of ₹50 per day for each day the return is late.
Small Taxpayers: If your aggregate turnover is up to ₹1.5 crore, the penalty is typically ₹20 per day.
2. Maximum Limit:
The daily penalties accumulate up to a maximum limit, which is generally ₹5,000 for most taxpayers and ₹1,000 for small taxpayers.
3. Additional Considerations:
Interest: Note that aside from the penalty, interest may also be charged on any tax due if the return is not filed on time.
Continuous Non-Filing: If returns are not filed for a continuous period, the tax authorities may take further actions, such as restrictions on claiming input tax credits.
Reverse charge is a mechanism under the Goods and Services Tax (GST) system where the responsibility for paying GST shifts from the supplier to the recipient. This means that instead of the seller collecting the tax from the buyer, the buyer is required to pay the GST directly to the government. KeyRead more
Reverse charge is a mechanism under the Goods and Services Tax (GST) system where the responsibility for paying GST shifts from the supplier to the recipient. This means that instead of the seller collecting the tax from the buyer, the buyer is required to pay the GST directly to the government.
Key Points:
Liability Shift: Under the reverse charge mechanism (RCM), if you are the recipient of certain specified goods or services, you must pay the applicable GST even if the supplier does not charge it.
Applicable Situations: Reverse charge is applicable in specific cases mandated by the GST law. This can include:
Certain categories of goods and services notified by the government.
Supplies from unregistered persons where the recipient is registered.
Transactions involving government departments or agencies.
Relevant Provisions: The provisions for reverse charge are primarily found in the GST Acts (both CGST and IGST), which outline the circumstances and conditions under which RCM applies.
Compliance: As a recipient, if you fall under the reverse charge mechanism, you must:
Pay the GST on the purchase.
Ensure proper accounting and reporting in your GST returns.
Claim input tax credit (if eligible) on the tax paid under reverse charge.
A:If you’re required to register under GST and fail to do so, the law imposes a penalty to discourage non-compliance. Here’s what you need to know: Penalty Provision:Under the CGST Act, if you do not register within the prescribed time, you may face a penalty. This penalty is generally calculated asRead more
A: If you’re required to register under GST and fail to do so, the law imposes a penalty to discourage non-compliance. Here’s what you need to know:
Penalty Provision: Under the CGST Act, if you do not register within the prescribed time, you may face a penalty. This penalty is generally calculated as a percentage of the tax that should have been collected on your turnover. In practice, it is often around 10% of the tax due on the turnover that required registration, with a minimum penalty amount prescribed by the authorities.
Additional Charges: Along with the penalty, interest may be charged on the unpaid tax amount until you complete your registration and clear the outstanding dues.
Importance of Timely Registration: Registering on time not only helps you avoid these financial penalties and interest but also ensures that you can avail input tax credits and comply with other GST compliance requirements.
Terminal Depreciation is essentially the final depreciation deduction that a taxpayer can claim on a fixed asset in the year it is disposed of or written off. It helps ensure that the entire cost of the asset is eventually written off for tax purposes. How It Works: Final Year Adjustment:When an assRead more
Terminal Depreciation is essentially the final depreciation deduction that a taxpayer can claim on a fixed asset in the year it is disposed of or written off. It helps ensure that the entire cost of the asset is eventually written off for tax purposes.
How It Works:
Final Year Adjustment: When an asset is sold or otherwise disposed of before the end of its useful life, the usual depreciation calculation may leave a remaining balance (the written down value). Terminal depreciation is the pro-rata depreciation claimed in the year of disposal based on the number of days the asset was in use.
Pro-Rata Calculation: In the disposal year, depreciation is calculated on a pro-rata basis. This means if the asset was used for part of the year, you claim a proportionate deduction for that period. This final adjustment is what we call terminal depreciation.
Purpose: The idea is to fully account for the cost of the asset in your tax computations. Without terminal depreciation, there might be an unabsorbed cost remaining in the books when the asset is disposed of.
Key Point:
Section 32 of the Income Tax Act, 1961 governs the depreciation of assets, including the pro-rata (or terminal) depreciation in the year of disposal. While “terminal depreciation” isn’t mentioned by name in the Act, the concept is inherent in the depreciation calculations applied when an asset is retired.
When you incur revenue expenses on scientific research—expenses that are recurring in nature and directly tied to your research activities—they can be claimed as a business deduction, provided they meet certain criteria. Steps to Claim the Deduction Ensure the Expense is “Wholly and Exclusively” IncRead more
When you incur revenue expenses on scientific research—expenses that are recurring in nature and directly tied to your research activities—they can be claimed as a business deduction, provided they meet certain criteria.
Steps to Claim the Deduction
Ensure the Expense is “Wholly and Exclusively” Incurred for Business
The research must be undertaken to generate or enhance your business income.
Only those expenses directly related to research (like salaries of research personnel, lab consumables, and other operational costs) can be claimed.
Proper Classification in Your Books
Record these expenses under the appropriate head (usually under research and development or scientific research expenses).
Keep detailed documentation (bills, receipts, contracts) to substantiate the claim during any tax scrutiny.
Utilize the Provisions of Section 35
If you are engaged in in-house research, Section 35 (specifically Section 35(2AB) for in-house R&D) may offer a weighted deduction—commonly allowing you to deduct a percentage (e.g., 150%) of the expenditure.
This weighted deduction boosts the benefit compared to standard business expenses, effectively reducing taxable income more significantly.
File Your Tax Return Accurately
When you file your income tax return, include the qualifying scientific research expenditure in your books as part of your overall business expenses.
Ensure that your tax computations reflect the weighted deduction if you meet the conditions under Section 35.
Key Points to Remember
Eligibility: The deduction is available only if the research is integral to your business operations. Research done purely for personal or non-business purposes does not qualify.
Documentation: Maintaining meticulous records is crucial. Properly categorizing and documenting your research expenses will support your claim if questioned by tax authorities.
Weighted Deduction Benefit: For companies engaged in in-house research, the weighted deduction (e.g., 150% of the expenditure) can significantly lower taxable income, making it an attractive incentive for promoting scientific research.
When it comes to claiming deductions for scientific research expenses, the answer really depends on how those expenses relate to your income-earning activities. Here’s the lowdown: If it’s Business-Related:When you’re running a business or are engaged in a profession and you spend money on scientifiRead more
When it comes to claiming deductions for scientific research expenses, the answer really depends on how those expenses relate to your income-earning activities.
Here’s the lowdown:
If it’s Business-Related: When you’re running a business or are engaged in a profession and you spend money on scientific research to help improve or innovate your business, then—provided you can show that the expense was incurred “wholly and exclusively” for business—the expense may be deductible as a business expense. This is in line with general business expenditure provisions in the Income Tax Act.
If it’s Personal: If you’re doing scientific research out of personal interest or for non-business reasons, unfortunately, that cost isn’t deductible. The tax law only allows deductions for expenses directly related to earning taxable income.
Alternatively, Support Research Through Donations: Even if your own research isn’t deductible because it’s not tied to your business, you can still support scientific research by donating to approved research institutions. In that case, the donation itself may qualify for a deduction under the provisions for charitable contributions.
Bottom Line: An individual can claim a deduction for scientific research expenses only if those expenses are directly linked to their business or professional activities. Personal research expenses are not deductible. However, if you donate to an approved research institution, you might enjoy a tax benefit for that contribution.
No – if you incur scientific research expenses that aren’t connected to your business, you cannot claim them as business expenses under Section 35. However, if you wish to support scientific research that falls outside your business scope, you might consider making a donation to an approved researchRead more
No – if you incur scientific research expenses that aren’t connected to your business, you cannot claim them as business expenses under Section 35. However, if you wish to support scientific research that falls outside your business scope, you might consider making a donation to an approved research institution (which can then be claimed under Section 80GGA).
Let’s Break It Down:
Business-Related Scientific Research (Section 35):
Purpose: The deduction under Section 35 is designed to reward companies and professionals for investing in research and development that enhances their business.
Key Requirement:
Wholly and exclusively incurred for business purposes.
Implication:
If your research activities aren’t tied to generating or improving your business income, you cannot claim these expenses as a deduction under this section.
Non-Business Related Research:
Alternative Approach:
If you’re passionate about scientific research that doesn’t directly relate to your business, you can support such initiatives by donating to approved research institutions or trusts.
Tax Benefit Route:
Under Section 80GGA, donations made to these approved institutions are eligible for a 100% deduction from your gross total income.
What This Means:
While you won’t be able to claim the research expenditure as a business expense, you still get a tax benefit by supporting the cause through a charitable donation.
Yes, the Income Tax Act, 1961 provides a deduction for capital expenditure incurred on scientific research under Section 35. This deduction is available to assessees engaged in business or profession who invest in scientific research. Key Provisions of Section 35: 100% Deduction for Own Research ActRead more
Yes, the Income Tax Act, 1961 provides a deduction for capital expenditure incurred on scientific research under Section 35. This deduction is available to assessees engaged in business or profession who invest in scientific research.
Key Provisions of Section 35:
100% Deduction for Own Research Activities
If the capital expenditure is incurred by the assessee for in-house scientific research, a 100% deduction is allowed in the year in which the expenditure is incurred.
This benefit is available even if the research project is unsuccessful.
Capital vs. Revenue Expenditure
Revenue expenditure on scientific research is also fully deductible under this section.
Capital expenditure (excluding land & buildings) can be claimed as a deduction.
Donation to Research Associations
If the expenditure is made in the form of a contribution to an approved scientific research association, university, or institution, enhanced deduction of 100% or 150% (as per eligibility) is available.
The institution must be approved by the Income Tax Department under Section 35(1)(ii) or (iii).
Important Conditions to Avail Deduction
The scientific research should be related to the assessee’s business.
The deduction is not available for capital expenditure on land.
The research facility should be recognized by the prescribed authority.
Conclusion
Section 35 provides a strong incentive for businesses to invest in scientific research. Whether the research is done in-house or through an approved institution, businesses can significantly reduce their taxable income by claiming the deduction for eligible expenses.
Yes, you can claim depreciation on an asset used in scientific research under the Income Tax Act, 1961, provided it is used wholly and exclusively for your business of scientific research. Key Points to Consider Applicable Provision:Depreciation on assets is generally allowed under Section 32 of theRead more
Yes, you can claim depreciation on an asset used in scientific research under the Income Tax Act, 1961, provided it is used wholly and exclusively for your business of scientific research.
Key Points to Consider
Applicable Provision: Depreciation on assets is generally allowed under Section 32 of the Income Tax Act. This includes both tangible and certain intangible assets used in the business.
Usage Criteria: For the asset to qualify, it must be used wholly and exclusively for the scientific research activities of your business. Proper documentation should support that the asset is used for research purposes.
Depreciation Rate: The rate of depreciation for scientific research equipment or assets will be prescribed under the Income Tax Rules. Often, specialized research equipment may attract higher depreciation rates due to rapid obsolescence.
Accounting Treatment: When you claim depreciation, the cost of the asset is written off over its useful life, thereby reducing your taxable income. This is a standard benefit available for any business asset used in operations, including those in scientific research.
Conclusion
If your asset is used exclusively for scientific research, you are entitled to claim depreciation under Section 32. Make sure to maintain proper records and follow the prescribed rates to ensure compliance with tax regulations.
Can we apply for surrender of GST number?
Yes, you can apply for the surrender of your GST registration if you no longer meet the eligibility criteria or if you wish to discontinue your GST compliance. Here’s what you need to know: Eligibility for Surrender:If your business turnover falls below the threshold, or if you are no longer engagedRead more
Yes, you can apply for the surrender of your GST registration if you no longer meet the eligibility criteria or if you wish to discontinue your GST compliance. Here’s what you need to know:
-
-
-
-
-
-
-
-
See lessEligibility for Surrender:
If your business turnover falls below the threshold, or if you are no longer engaged in any taxable activities, you may opt to surrender your GST registration.
Relevant Provisions:
Under the CGST Act, provisions allow taxpayers to voluntarily surrender their GST number. This process is intended to help businesses avoid unnecessary compliance if they are no longer required to be registered.
Procedure to Surrender Your GST Number:
Log in to the GST Portal:
Access your account on the official GST portal.
Submit an Application:
Fill out the form for cancellation/surrender of registration, providing the required details and reasons.
Compliance Check:
Ensure that all pending returns are filed and any outstanding tax liabilities or refunds are settled.
Confirmation:
Once your application is processed, you will receive confirmation that your GST registration has been surrendered.
Important Reminder:
Surrendering your GST number means you can no longer collect GST on your sales or claim input tax credits. Make sure this is the right step for your business before applying.
What is the penalty for not filing of GST return?
If you fail to file your GST return by the due date, you can incur a penalty under the GST law. Here’s a straightforward explanation: 1. Daily Penalty: General Taxpayers:You may be charged a penalty of ₹50 per day for each day the return is late. Small Taxpayers:If your aggregate turnover is up to ₹Read more
If you fail to file your GST return by the due date, you can incur a penalty under the GST law. Here’s a straightforward explanation:
1. Daily Penalty:
General Taxpayers:
You may be charged a penalty of ₹50 per day for each day the return is late.
Small Taxpayers:
If your aggregate turnover is up to ₹1.5 crore, the penalty is typically ₹20 per day.
2. Maximum Limit:
The daily penalties accumulate up to a maximum limit, which is generally ₹5,000 for most taxpayers and ₹1,000 for small taxpayers.
3. Additional Considerations:
-
-
See lessInterest:
Note that aside from the penalty, interest may also be charged on any tax due if the return is not filed on time.
Continuous Non-Filing:
If returns are not filed for a continuous period, the tax authorities may take further actions, such as restrictions on claiming input tax credits.
What is reversed charge in GST?
Reverse charge is a mechanism under the Goods and Services Tax (GST) system where the responsibility for paying GST shifts from the supplier to the recipient. This means that instead of the seller collecting the tax from the buyer, the buyer is required to pay the GST directly to the government. KeyRead more
Reverse charge is a mechanism under the Goods and Services Tax (GST) system where the responsibility for paying GST shifts from the supplier to the recipient. This means that instead of the seller collecting the tax from the buyer, the buyer is required to pay the GST directly to the government.
Key Points:
-
-
-
-
-
-
-
-
-
-
See lessLiability Shift:
Under the reverse charge mechanism (RCM), if you are the recipient of certain specified goods or services, you must pay the applicable GST even if the supplier does not charge it.
Applicable Situations:
Reverse charge is applicable in specific cases mandated by the GST law. This can include:
Certain categories of goods and services notified by the government.
Supplies from unregistered persons where the recipient is registered.
Transactions involving government departments or agencies.
Relevant Provisions:
The provisions for reverse charge are primarily found in the GST Acts (both CGST and IGST), which outline the circumstances and conditions under which RCM applies.
Compliance:
As a recipient, if you fall under the reverse charge mechanism, you must:
Pay the GST on the purchase.
Ensure proper accounting and reporting in your GST returns.
Claim input tax credit (if eligible) on the tax paid under reverse charge.
What is the penalty for not registering in GST?
A:If you’re required to register under GST and fail to do so, the law imposes a penalty to discourage non-compliance. Here’s what you need to know: Penalty Provision:Under the CGST Act, if you do not register within the prescribed time, you may face a penalty. This penalty is generally calculated asRead more
A:
If you’re required to register under GST and fail to do so, the law imposes a penalty to discourage non-compliance. Here’s what you need to know:
-
-
-
See lessPenalty Provision:
Under the CGST Act, if you do not register within the prescribed time, you may face a penalty. This penalty is generally calculated as a percentage of the tax that should have been collected on your turnover. In practice, it is often around 10% of the tax due on the turnover that required registration, with a minimum penalty amount prescribed by the authorities.
Additional Charges:
Along with the penalty, interest may be charged on the unpaid tax amount until you complete your registration and clear the outstanding dues.
Importance of Timely Registration:
Registering on time not only helps you avoid these financial penalties and interest but also ensures that you can avail input tax credits and comply with other GST compliance requirements.
What is terminal Depreciation?
Terminal Depreciation is essentially the final depreciation deduction that a taxpayer can claim on a fixed asset in the year it is disposed of or written off. It helps ensure that the entire cost of the asset is eventually written off for tax purposes. How It Works: Final Year Adjustment:When an assRead more
Terminal Depreciation is essentially the final depreciation deduction that a taxpayer can claim on a fixed asset in the year it is disposed of or written off. It helps ensure that the entire cost of the asset is eventually written off for tax purposes.
How It Works:
Final Year Adjustment:
When an asset is sold or otherwise disposed of before the end of its useful life, the usual depreciation calculation may leave a remaining balance (the written down value). Terminal depreciation is the pro-rata depreciation claimed in the year of disposal based on the number of days the asset was in use.
Pro-Rata Calculation:
In the disposal year, depreciation is calculated on a pro-rata basis. This means if the asset was used for part of the year, you claim a proportionate deduction for that period. This final adjustment is what we call terminal depreciation.
Purpose:
The idea is to fully account for the cost of the asset in your tax computations. Without terminal depreciation, there might be an unabsorbed cost remaining in the books when the asset is disposed of.
Key Point:
-
See lessSection 32 of the Income Tax Act, 1961 governs the depreciation of assets, including the pro-rata (or terminal) depreciation in the year of disposal. While “terminal depreciation” isn’t mentioned by name in the Act, the concept is inherent in the depreciation calculations applied when an asset is retired.
How to claim deduction of revenue expenses incurred on Scientific Research?
When you incur revenue expenses on scientific research—expenses that are recurring in nature and directly tied to your research activities—they can be claimed as a business deduction, provided they meet certain criteria. Steps to Claim the Deduction Ensure the Expense is “Wholly and Exclusively” IncRead more
When you incur revenue expenses on scientific research—expenses that are recurring in nature and directly tied to your research activities—they can be claimed as a business deduction, provided they meet certain criteria.
Steps to Claim the Deduction
Ensure the Expense is “Wholly and Exclusively” Incurred for Business
The research must be undertaken to generate or enhance your business income.
Only those expenses directly related to research (like salaries of research personnel, lab consumables, and other operational costs) can be claimed.
Proper Classification in Your Books
Record these expenses under the appropriate head (usually under research and development or scientific research expenses).
Keep detailed documentation (bills, receipts, contracts) to substantiate the claim during any tax scrutiny.
Utilize the Provisions of Section 35
If you are engaged in in-house research, Section 35 (specifically Section 35(2AB) for in-house R&D) may offer a weighted deduction—commonly allowing you to deduct a percentage (e.g., 150%) of the expenditure.
This weighted deduction boosts the benefit compared to standard business expenses, effectively reducing taxable income more significantly.
File Your Tax Return Accurately
When you file your income tax return, include the qualifying scientific research expenditure in your books as part of your overall business expenses.
Ensure that your tax computations reflect the weighted deduction if you meet the conditions under Section 35.
Key Points to Remember
-
-
-
See lessEligibility:
The deduction is available only if the research is integral to your business operations. Research done purely for personal or non-business purposes does not qualify.
Documentation:
Maintaining meticulous records is crucial. Properly categorizing and documenting your research expenses will support your claim if questioned by tax authorities.
Weighted Deduction Benefit:
For companies engaged in in-house research, the weighted deduction (e.g., 150% of the expenditure) can significantly lower taxable income, making it an attractive incentive for promoting scientific research.
Can an Individual claim deduction of expenditure made on Scientific Research?
When it comes to claiming deductions for scientific research expenses, the answer really depends on how those expenses relate to your income-earning activities. Here’s the lowdown: If it’s Business-Related:When you’re running a business or are engaged in a profession and you spend money on scientifiRead more
When it comes to claiming deductions for scientific research expenses, the answer really depends on how those expenses relate to your income-earning activities.
Here’s the lowdown:
If it’s Business-Related:
When you’re running a business or are engaged in a profession and you spend money on scientific research to help improve or innovate your business, then—provided you can show that the expense was incurred “wholly and exclusively” for business—the expense may be deductible as a business expense. This is in line with general business expenditure provisions in the Income Tax Act.
If it’s Personal:
If you’re doing scientific research out of personal interest or for non-business reasons, unfortunately, that cost isn’t deductible. The tax law only allows deductions for expenses directly related to earning taxable income.
Alternatively, Support Research Through Donations:
Even if your own research isn’t deductible because it’s not tied to your business, you can still support scientific research by donating to approved research institutions. In that case, the donation itself may qualify for a deduction under the provisions for charitable contributions.
Bottom Line:
See lessAn individual can claim a deduction for scientific research expenses only if those expenses are directly linked to their business or professional activities. Personal research expenses are not deductible. However, if you donate to an approved research institution, you might enjoy a tax benefit for that contribution.
Can a tax payer claim deduction of expenditure on scientific research even it is not related to his business?
No – if you incur scientific research expenses that aren’t connected to your business, you cannot claim them as business expenses under Section 35. However, if you wish to support scientific research that falls outside your business scope, you might consider making a donation to an approved researchRead more
No – if you incur scientific research expenses that aren’t connected to your business, you cannot claim them as business expenses under Section 35. However, if you wish to support scientific research that falls outside your business scope, you might consider making a donation to an approved research institution (which can then be claimed under Section 80GGA).
Let’s Break It Down:
-
-
-
-
-
-
-
-
-
-
-
-
-
See lessBusiness-Related Scientific Research (Section 35):
Purpose: The deduction under Section 35 is designed to reward companies and professionals for investing in research and development that enhances their business.
Key Requirement:
Wholly and exclusively incurred for business purposes.
Implication:
If your research activities aren’t tied to generating or improving your business income, you cannot claim these expenses as a deduction under this section.
Non-Business Related Research:
Alternative Approach:
If you’re passionate about scientific research that doesn’t directly relate to your business, you can support such initiatives by donating to approved research institutions or trusts.
Tax Benefit Route:
Under Section 80GGA, donations made to these approved institutions are eligible for a 100% deduction from your gross total income.
What This Means:
While you won’t be able to claim the research expenditure as a business expense, you still get a tax benefit by supporting the cause through a charitable donation.
is deduction of capital expenditure incurred on scientific research by the assess allowed?
Yes, the Income Tax Act, 1961 provides a deduction for capital expenditure incurred on scientific research under Section 35. This deduction is available to assessees engaged in business or profession who invest in scientific research. Key Provisions of Section 35: 100% Deduction for Own Research ActRead more
Yes, the Income Tax Act, 1961 provides a deduction for capital expenditure incurred on scientific research under Section 35. This deduction is available to assessees engaged in business or profession who invest in scientific research.
Key Provisions of Section 35:
100% Deduction for Own Research Activities
If the capital expenditure is incurred by the assessee for in-house scientific research, a 100% deduction is allowed in the year in which the expenditure is incurred.
This benefit is available even if the research project is unsuccessful.
Capital vs. Revenue Expenditure
Revenue expenditure on scientific research is also fully deductible under this section.
Capital expenditure (excluding land & buildings) can be claimed as a deduction.
Donation to Research Associations
If the expenditure is made in the form of a contribution to an approved scientific research association, university, or institution, enhanced deduction of 100% or 150% (as per eligibility) is available.
The institution must be approved by the Income Tax Department under Section 35(1)(ii) or (iii).
Important Conditions to Avail Deduction
The scientific research should be related to the assessee’s business.
The deduction is not available for capital expenditure on land.
The research facility should be recognized by the prescribed authority.
Conclusion
Section 35 provides a strong incentive for businesses to invest in scientific research. Whether the research is done in-house or through an approved institution, businesses can significantly reduce their taxable income by claiming the deduction for eligible expenses.
See lessCan we claim depreciation on an assets used in scientific research under income tax?
Yes, you can claim depreciation on an asset used in scientific research under the Income Tax Act, 1961, provided it is used wholly and exclusively for your business of scientific research. Key Points to Consider Applicable Provision:Depreciation on assets is generally allowed under Section 32 of theRead more
Yes, you can claim depreciation on an asset used in scientific research under the Income Tax Act, 1961, provided it is used wholly and exclusively for your business of scientific research.
Key Points to Consider
Applicable Provision:
Depreciation on assets is generally allowed under Section 32 of the Income Tax Act. This includes both tangible and certain intangible assets used in the business.
Usage Criteria:
For the asset to qualify, it must be used wholly and exclusively for the scientific research activities of your business. Proper documentation should support that the asset is used for research purposes.
Depreciation Rate:
The rate of depreciation for scientific research equipment or assets will be prescribed under the Income Tax Rules. Often, specialized research equipment may attract higher depreciation rates due to rapid obsolescence.
Accounting Treatment:
When you claim depreciation, the cost of the asset is written off over its useful life, thereby reducing your taxable income. This is a standard benefit available for any business asset used in operations, including those in scientific research.
Conclusion
If your asset is used exclusively for scientific research, you are entitled to claim depreciation under Section 32. Make sure to maintain proper records and follow the prescribed rates to ensure compliance with tax regulations.
See less