Tax incentives given by the Budget for research and development made the Indian pharmaceutical firms sport a smile but they are left wondering if the hike in excise duty to 10 per cent on all non-petroleum products will be applicable to them.
Finance Minister Pranab Mukherjee proposed a weighted tax deduction on expenditure incurred in in-house research and development activities to 200 per cent from the current 150 per cent in the Budget.
"We welcome the government's move to increase weighted tax deduction to 200 per cent as research and development activities is a must and in pharma sector, where it is most urgently required," Indian Drug Manufacturers Association Executive Director Gajanan Wakankar said.
However, lack of clarity on whether the pharma sector would also be covered under the increased excise on all non-petroleum products from 8-10 per cent, held back the sector from celebrating.
However, lack of clarity on whether the pharma sector would also be covered under the increased excise on all non-petroleum products from 8-10 per cent, held back the sector from celebrating.
Currently, the pharma sector attracts 4 per cent excise duty after CENVAT was cut by 4 per cent in December 2008 as part of a stimulus package.
