Govt mulls tax break for desi pharma companies

The government is considering to restore tax benefits on R&D expenditure incurred by local pharmaceutical companies in the upcoming Budget 2020.

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Govt mulls tax break for desi pharma companies

NEW DELHI: In a move to boost research in drug manufacturing, the government is considering to restore tax benefits on research and development (R&D) expenditure incurred by local pharmaceutical companies in the upcoming Budget 2020.

This is one of the key recommendations made by the department of pharmaceuticals (DoP) as part of its budget proposal to the finance ministry, an official source said.

Also read: Industry to regulate promotional practices: DoP

The pharmaceutical industry is hopeful that the government will restore the weighted deduction on expenditure incurred on R&D to 200%.

At present, the industry enjoys 150% weighted deduction on R&D but it is scheduled to come down to 100% from 2020 unless the government takes a call on it.

Also read: Importance of patent regime in pharma industry

The government had introduced a weighted tax deduction of 200% on expenditure on R&D in the 2010 budget, in order to boost innovation in the country.

However, the government slashed the benefit to 150% from 2017 onwards and 100% from 2020.

Besides the deduction on research, the department has also suggested offering some incentives to encourage domestic manufacturing of bulk drugs or Active Pharmaceutical Ingredients (API) used as raw material in the formulation of medicine.

Also read: Subsidy on loans for pharmaceutical infrastructure

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