''We expect this budget to push for a new era of accelerated reforms. We hope the budget supports the industry by giving incentives to exporters like exemption under section 80HHC. The government should also give impetus to R&D through incentive-linked funding,'' according to Pawan Chaudhary, CMD, Venus Remedies. ''We also expect more clarity on guidelines on expenditure liable for weighted average deduction under section 35(2) AB of the Income Tax Act. All the expenditure incurred on R&D, whether in-house or outsourced, in India or overseas, should be liable for tax deduction,'' Chaudhary added.
Pawan Chaudhary, continued, ''IPR taxation is another area where India is yet to take any initiative. Many European countries have a 'Patent Box' scheme to provide special tax rebates on income from patents. It is high time India took a decisive stand on such issues.''
The inverted structure of excise duty in the pharmaceutical industry also needs rectification. Meant to be temporary tools of taxation, surcharge and education cess should be done away with and replaced by a more rational tax structure based on a wider tax base. ''Furthermore, Minimum Alternate Tax (MAT) rates should be brought down as they are very high and impact cash flows of companies.Since most of the pharmaceutical companies have their subsidiaries or arms overseas and are subject to international taxes, safe harbour rules should be extended to cover sales of pharmaceutical products,'' he said.
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