Rule 30 — Prescribed authority and process of approval for expenditure on scientific research under section 45(3)(c). Made under s.45 of the Income-tax Act, 2025.
Rule 30 gives effect to Section 45 of the Income-tax Act, 2025. A rule cannot go beyond the section it serves: where the two seem to differ, the section governs.
Sub-rules (1) and (2) name the prescribed authority. For section 45(3)(c)(i) to (iii) it is the head of the National Laboratory, the University or the Indian Institute of Technology, as the case may be. For section 45(3)(c)(iv) it is the Principal Scientific Adviser to the Government of India.
Sub-rule (3) requires the application for approval of a scientific research programme under section 45(3)(c) to be made by a sponsor in Form No. 7. Sub-rule (4) requires the prescribed authority, if satisfied that it is feasible to carry out the programme and subject to the other conditions in the rule, to pass an order in writing in Form No. 8 approving the programme within two months from the end of the month in which the application is received, effective for such period not exceeding five tax years. Sub-rule (5) allows the Principal Scientific Adviser to authorise an officer not below the rank of a Deputy Secretary to issue that order, after he has himself approved the programme. Sub-rule (6) requires a reasonable opportunity of being heard before an application is rejected.
Sub-rule (7) attaches six conditions to approval. The programme must not relate purely to market research, sales promotion, quality control, testing, commercial production, style changes, routine data collection or activities of a like nature. The National Laboratory, University, Indian Institute of Technology or specified person must maintain a separate account for each approved programme, and that account must be audited annually with a copy furnished to the Chief Commissioner of Income-tax having jurisdiction over the sponsor on or before the due date specified in section 263(1)(c) for each succeeding tax year. Three further papers go to the same Chief Commissioner: a report in Form No. 10 by the prescribed authority within three months from the date of granting approval, showing progress of implementation and actuals of expenditure incurred by the sponsor and the research institution; a completion certificate with a copy of the report on the research activities, salient features of the results and their further application for commercial exploitation, given jointly by the sponsor and the institution on completion; and a copy of the audited statement of accounts for the programme, by the head of the institution or the Principal Scientific Adviser, within six months of completion. The prescribed authority shall not extend the duration of the programme or approve any escalation in costs, and assets acquired for executing the approved programme shall not be disposed of without the approval of that Chief Commissioner.
Sub-rule (8) requires the institution to issue a receipt of payment for carrying out an approved programme in Form No. 9. Sub-rule (9) allows the sponsor to apply for a fresh order at least three months before the expiry of the effective period of the order passed under sub-rule (4). Sub-rule (10) defines "audited" as audit of accounts by an accountant as defined in section 515(3)(b), and "sponsor" as a person who makes an application in Form No. 7.
Section 45(3)(c) allows a deduction for a sum paid to a National Laboratory, University, Indian Institute of Technology or specified person for an approved scientific research programme, but the Act cannot decide whether a programme is research at all, nor track money once it leaves the sponsor. The rule puts that decision with people who can make it — the head of the institution, or the Principal Scientific Adviser — and then follows the money with a separate account, an annual audit, a progress report, a completion certificate and a restriction on the assets bought with it. The bar on extending duration or approving cost escalation keeps an approval to the programme that was actually sanctioned.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Time to pass the order approving the programme in Form No. 8 | Two months | From the end of the month in which the application is received, where the prescribed authority is satisfied that it is feasible to carry out the programme | Sub-rule (4) |
| Maximum effective period of an approval | Not exceeding five tax years | An outer limit on what the order may provide, not a period every approval carries; the order fixes the actual period | Sub-rule (4) |
| Minimum rank of the officer who may issue the order for the Principal Scientific Adviser | Not below the rank of a Deputy Secretary | Only after the programme has been approved by the Principal Scientific Adviser himself | Sub-rule (5) |
| Due date for furnishing the audited account of the programme to the Chief Commissioner | On or before the due date specified in section 263(1)(c) for furnishing the return of income | For each succeeding tax year, the account being audited annually | Sub-rule (7)(c) |
| Time for the prescribed authority's progress report in Form No. 10 | Three months | From the date of granting approval to the programme | Sub-rule (7)(d)(A) |
| Time for the audited statement of accounts after completion | Six months | Of the completion of the programme, furnished by the head of the institution or the Principal Scientific Adviser | Sub-rule (7)(d)(C) |
| Time for applying for a fresh order | At least three months before expiry | Of the effective period of the order passed under sub-rule (4) | Sub-rule (9) |
Five tax years is a ceiling, not a term. Sub-rule (4) says the order is to be effective for such period not exceeding five tax years, so the operative period is whatever the Form No. 8 order states, and a sponsor who assumes five years and does not apply under sub-rule (9) at least three months before the stated expiry has no approval running. The two-month clock for the order runs from the end of the month of receipt, not the date of receipt. Once approved, the programme is frozen: sub-rule (7)(e) forbids the prescribed authority from extending its duration or approving any escalation in costs, so a cost overrun cannot be regularised by the same authority that granted the approval. The reporting obligations sit largely on the institution and the prescribed authority rather than on the sponsor, but they all run to the Chief Commissioner having jurisdiction over the sponsor, which is where the sponsor's claim will be tested. Assets bought for the programme stay tied to it — disposal needs that Chief Commissioner's approval, and the restriction is not limited to the effective period of the order.
A company applies as sponsor in Form No. 7 on 9 May for approval of a research programme at a University. The two months in sub-rule (4) run from the end of May, so the Form No. 8 order is due by 31 July, and it approves the programme for three tax years. Within three months of that grant the prescribed authority must furnish Form No. 10 to the Chief Commissioner having jurisdiction over the company, showing progress and the actual expenditure. If the programme's costs run over, the prescribed authority cannot sanction the escalation under sub-rule (7)(e); and if the company wants the programme to continue past the three years, it must apply for a fresh order at least three months before that period ends.
A sponsor meets it when it files Form No. 7 and takes the Form No. 9 receipt for its payment, and again in an assessment where the section 45(3)(c) claim is tested against the Form No. 8 order and the reports on the Chief Commissioner's file.
approving such programme within two months from the end of the month in which application is received, to be effective for such period not exceeding five tax years
the prescribed authority shall not extend the duration of the programme or approve any escalation in costs
the assets acquired by the National Laboratory, University, Indian Institute of Technology or specified person, for executing the approved programme shall not be disposed of without the approval of the Chief Commissioner of Income-tax having jurisdiction over the sponsor
