Extend Section 35 to benefit pharma R

New Delhi, Dec 19 (UNI) Industry chamber Assocham today urged the government to extend provisions of Section 35 (2AB) of Income Tax Act to R&D activities in pharma industry until March 31 2017, to help pharma companies in long term planning for research and to face the competition in the sector.

The provisions of Section 35 (2AB) of Income Tax Act expires on March 31, 2007 and are required to carry out clinical trials before pharmaceutical products could be commercially launched in the market as without concessions under this section, the domestic pharmaceutical industry would have to incur huge expenditure, the chamber said.

''There is, thus great need for significant increase in R&D spending which could be possible provided Section 35(2AB) provisions of Income-Tax Act are extended for another 10 years,'' said Assocham President Anil K Agarwal.

The extension of the provision will incorporate the companies new innovations into pharmaceutical products and give the industry relief to take on global pharmaceutical market, the Chamber added.

The chamber in an SoS to Ministry of Fertilisers and Chemicals also pointed out that in the Indian pharmaceutical industry, the R&D expenditure of major Indian pharma companies is about under five per cent of their turnover against global benchmark of 15 per cent.

In addition, the chamber has also argued that in view of long term benefits of R&D to the economy at large, all excisable goods used for the purposes should be exempted from central excise duty.

It has further argued that considering the potential in earning foreign exchange to reduce research cost, cenvat credit should be permitted on capital goods deployed for R&D activity installed within the factory premises or outside factory premises.

The chamber has also demanded exemptions in services provided and availed in relation to R&D activities, imports of all capital goods for R&D purposes and clinical trials expenses should also be covered under Section 35 A (B) of Income-Tax Act.

In addition, it has urged the government that import duty exemption for clinical trials samples should be granted on the basis of authorisation and licence by Drug Controller General of India as also keep patented drugs through indigenous R&D out of purview of price control and clinical trials conducted by Indian pharma companies outside India should also be allowed the same tax benefits as prevailing within the country.

UNI KR SRS ND1720