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TAX TALK: TAX CREDITS & REFUND REGARDING SCIENTIFIC RESEARCH & DEVELOPMENT

In the era of globalization and industrialization every nation wants to be favorite destination for industrialist. To attract the investment it is necessary to more than that of the basic amenities i.e. industrialist need tax concessions.
Now days various countries like Thailand, China India, Canada, England and many more…. have started giving tax concessions &credits for those who to R&D activities in order to save the environment.
In this article I will give you an overview regarding tax credits & refunds on account of scientific research & development in Canada
The scientific research and experimental development (SR&ED) tax incentive program is the single largest federal program supporting business research and development (R&D) in Canada, providing over $3 billion in tax assistance to Canadian businesses in 2006.

Q.What does the Canadian Income Tax provide for research & development?
The SR&ED tax incentives consist of three components: an income tax deduction, an investment tax credit and, in certain circumstances, a tax credit refund. Tax incentives modify the after-tax cost of SR&ED investment, thereby lowering the company’s initial costs and making SR&ED activities more attractive. Each year, over 11,000 companies claim the federal SR&ED tax incentives. It is projected that the tax credit alone will cost the federal government over $2.6 billion in 2007, making tax incentives the most important element of federal assistance for SR&ED.
Q. What the company must do to take the tax advantage?
To take advantage of tax incentives for SR&ED, a company must be able to show that it has invested in one of these types of research. Both current and capital expenditures qualify for federal SR&ED tax incentives. Current expenditures include the salaries of research personnel, general SR&ED costs (telephone and electricity, office equipment and so forth), as well as costs, including maintenance costs, associated with facilities and equipment used for SR&ED purposes. Capital expenditures include assets – facilities and equipment, but not buildings – used for SR&ED purposes.

Q. What are tax deductions allowable on SR&ED?
For the purposes of SR&ED tax incentives, corporations are divided into three categories: Canadian-controlled private corporations (CCPCs) established in Canada and controlled neither by government-owned agencies nor by non-residents; other corporations; and proprietorships, partnerships and trusts.
The SR&ED tax incentives have two components:
An income tax deduction allows immediate expensing of all allowable expenditures (including full expensing of capital in the year of purchase subject to certain rules). The full value of current and capital SR&ED expenditures are added to a pool of unused SR&ED deductions, which can be taken at the discretion of the taxpayer. Unused deductions can be carried forward indefinitely.
An investment tax credit, which is applied to income taxes otherwise payable. Unused credits can be carried forward 20 years and back three years to reduce taxes payable in those years, and are partially or fully refundable for smaller businesses.
A business can generally claim both the income tax deduction and the investment tax credit on the same SR&ED expenditures, although there are some specific differences in the base of expenditures eligible for the two components of the program.
Federal government tax incentives for SR&ED target three types of research: basic research, work performed for the advancement of knowledge and science without any practical application in mind; applied research, carried out for the advancement of science, but with a specific application in mind; and experimental development, aimed at achieving technological progress. In experimental development, the results of basic and applied research are used to create new products or processes, or to improve those that already exist.

Q. What are the tax rates?
There are two rates of investment tax credits (ITCs) for SR&ED in Canada:
The general rate is 20 per cent; and an enhanced rate of 35 per cent of r&d tax credit is provided to small Canadian-controlled private corporations (CCPCs) on their first $2 million of qualified expenditures .

Q. Are their any SR&ED consultants?
Yes, there are many SR&ED consultants in Canada which can give you details about the taxes and help you in getting your tax refunds.
Conclusion
The Auditor General of Canada (2000) and industry both raised concerns about the complexity of the SR&ED tax incentive system. This complexity has come about partly because of the growing number of criteria governing the system’s application. Similarly, many of them find it difficult and time-consuming to thoroughly review the claims. Even though many of us find it difficult & time consuming, the tax credits and refunds will help to save the greenery as well as savings for the companies. It has been rightly said that:
MONEY SAVED IS MONEY EARNED!

GETTING PAN CARD IS A HERCULEAN TASK

Having PAN card is now becomes necessity. PAN is Permanent Account Number. PAN card is required to mention in Tax returns, investing in share markets, mutual funds, purchasing property etc. For issuing PAN card Government of India has appointed NSDL & UTI. Although the Income Tax Department has outsourced the issuance process of PAN card but the customers are not happy with the services provided by them. Mr. Umesh Deshmukh working in Nagpur (IND) based Chartered Accountancy firm M/s. Vilas Kulkarni & Associates asserts that ‘getting PAN card through NSDL or from their franchisee is a herculean task’. NSDL has their own set of rules which are different from UTI.  The hurdle for PAN starts from the beginning itself, you have to purchase the Form 49A from their office only & not even photocopy or from any other sources (Income Tax website have all forms Free of cost). The front end managers which deals with customers are not trained and do not have proper knowledge. They reject the forms for simple reasons without any logic. M/s Efficient Lifescience & Pharma. Pvt. Ltd. (name changed) had applied for PAN card. In Form 49A there is a separate row in which you have to mention ‘the name you would like on the PAN card’. They wanted their name to be printed as ‘ELP Pvt. Ltd.’ on the PAN. The NSDL franchisee rejected their application on the grounds that they have to mention the company’s full name. The rules published by Income Tax Department of India clearly mentions that the name printed on PAN will be as per your choice. The same PAN form was then submitted in UTI. Their they accepted without any cross questioning. The UTI people accept the photocopy of downloaded PAN form. ‘We have fade with NSDL & their Franchisee. Now we submit all our clients PAN/ TAN application forms in UTI,’ said an audit article working with M/s. A N Bhagat & co.
Its astonishing that the PAN card is issued by Income Tax Department of India, how the Pan/ TAN forms can be accepted or rejected by these PAN issuing companies by applying their own set of rules.

INDIAN MARKET RATES FOR GOLD & SILVER- III

Given below are the gold & silver rates of 10 years from 1974-83required for valuation purposes and calculating tax.

1 Tola = 11.6639 Grams 10Grams = 0.8573 Tola

INDIAN MARKET RATES FOR GOLD & SILVER- II

Given below are the gold & silver rates of 10 years from 1965-1974 required for valuation purposes and calculating tax.

1 Tola = 11.6639 Grams 10Grams = 0.8573 Tola