Research & Development Cess – A beginners guide with all details
Government has enacted the Research and Development Cess Act of 1986 to provide for levy and collection of a cess on all payments made for the import of technology.Recently we provide complete details for professional Tax and What is Government Security?.
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Payable by :
The cess is payable by an industrial concern importing technology on or before making any payment towards such import.
The term technology was defined by the act for this purpose. Here I’m quoting the defined terms as per the act.
Technology means :
” Any special or technical knowledge or any special service required for any purpose what-soever by an industrial concern under any foreign collaboration and includes designs, drawings, publications and technical personnel”.
Rate applicable :
As per Section 3 of the Act, Central Government may from time to time by notification in the official gazette levy and collect cess at such rate but not exceeding 5% on all payments made towards import of technology.
As per Research and Development Cess Rules, 1987 this is to be levied on all the payments which are covered under any or all of the following :
(1) Payment made towards import of technology as approved by the Central Government in terms of any foreign collaboration agreement.
(2) Payment made towards the cost of drawings and designs as approved by the Central Government.
(3) Payment made to foreign collaborator or any other personfor or in connection with deputation of technical personnel to India in accordance with the approval granted by Central Government or Reserve Bank(RBI).
(4) Any other payment made towards import of technology and approved by the Central Government.
Mode of payment :
The fee payable can be deposited through Challan Form TR-6 (form enclosed), with Reserve Bank of India or State Bank of India, Union Bank of India (authorized Branches) under Central Government Account (Receipt & Payment) Rules, 1983 under following head of account:
Penalty provision :
In case of failure in making such payment to the Technology development board, penalty may be imposed under Section 9 of the R&D Cess Act, of an amount not exceeding 10 times the cess amount in arrears.
The Central Government has the power to exempt any industrial concern from payment of the cess towards import of technology.