While welcoming the move to simplify
taxation laws, Reddy’s said withdrawal of R&D weighted deduction is
potentially counter-productive and likely to negatively impact India’s
innovation efforts.
The Central Board of Direct Taxes (CBDT)
has proposed to reduce the tax exemption offered on investments made
for scientific research from the current 200 percent to 100 percent.
“Countries across the world have been
introducing various measures for promoting R&D initiatives in form
of R&D credit, R&D weighted deduction and Patent Box etc. The
R&D weighted deduction must continue, so as to provide India level
playing field in an increasingly competitive global innovation
environment,” said Saumen Chakraborty, President and chief financial
officer (CFO) of Dr. Reddy’s Laboratories.
He said the proposal to reduce corporate
tax from 30 percent to 25 percent over next four years, coupled with
phasing out the investment linked and profit linked deductions, is a
step in right direction.
He, however, said the government should also consider a reduction of Minimum Alternate Tax (MAT) in a phased manner.
“The Introduction of a sunset clause for
Special Economic Zones (SEZ) with effect from March 31, 2017, seems to
be at odds with the ‘Make in India’ objective. This could be deferred
for a few more years, considering the significant investments by the
companies, as also the impact SEZs encountered due to the MAT levy,” he
added.
