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

1. 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.

2. 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.

3. 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.

4. 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.