Dr Reddy's Laboratories against move to phase out tax breaks on R&D

The proposed roadmap by the Central Bureau for Direct Taxes (CBDT) to bring corporate tax down from the current 30 per cent to 25 per cent by doing away with tax breaks to Indian industry, which has not gone down too well with the pharma industry, has the CFO of Dr Reddy's Laboratories reacting to the measure now.

In a statement issued by the company, Saumen Chakraborty, President and CFO of Dr. Reddy's Laboratories says that while "the press release by the CBDT relating to tax reduction from 30 per cent to 25 per cent over next four years,  coupled with phasing out the investment linked and profit linked deductions  is a step in right direction, the government should also consider a reduction of MAT in a phased manner as well".

He also says: "The Introduction of a sunset clause for SEZs  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."

However, commenting on the withdrawal of R&D weighted deduction, he says: it "is potentially counter-productive and likely to negatively impact India's innovation efforts. 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".

Earlier, in response to the move by the government, Kiran Mazumdar-Shaw, chairperson and managing director of Biocon, twitted: "At a time when the government is talking about 'Innovate in India', it's ironical that tax exemptions on R&D are being phased out."

And also that she was "very surprised that the CBDT has ignored serious objections from DIPP (Department of Industrial Policy & Promotion) with respect to rolling back tax breaks."