The Budget unveiled for the Financial year 2010 hopes to bring an increase in its incentive to Research and Development conducted by private organizations, by increasing the weighted deduction from 150% to 200 % on in-house research and development (R&D) expenses including the cost of patenting inventions.

The Budget also aims to increase weighted deduction on payments made to National Laboratories and research associations, colleges, universities and the like for scientific research from 125% to 175%.

The Finance Minister, Mr. Pranab Mukhajee, in his speech before the Parliament stated “Last year, I extended the scope of weighted deduction on expenditure incurred on in-house research and development (R&D) to all manufacturing businesses except for a small negative list. To further encourage R&D across all sectors of the economy, I now propose to enhance the weighted deduction on expenditure incurred on in-house R&D from 150 per cent to 200 per cent. I also propose to enhance the weighted deduction on payments made to National Laboratories, research associations, colleges, universities and other institutions, for scientific research from 125 per cent to 175 per cent.”

The proposed changes would help Research & Development in private and public sectors which usually works on a constrained budget and would also improve patent filing in India.