R&D Accounting Compliance

R&D Ledger Control

Separate R&D Accounts & Post-Recognition Compliance

Securing DSIR recognition is only the first step. To maintain the status and claim the 100% tax write-offs under Section 35(2AB), companies must adhere to strict accounting compliance.

Mandatory Separate Accounting System

The company must set up separate ledger accounts to record all transactions relating to the recognized R&D unit. Research assets and operating costs must not be mixed with commercial operations.

Cost Allocation Guidelines

• Capital Assets: Dedicated R&D lab equipment, polyhouse structures, and farm tractors must be recorded in a distinct asset register. Land and building costs are excluded from tax deduction calculations.
• Operational Expenses: Research staff salaries, chemicals, consumable research materials, electricity directly consumed by the lab (sub-metering required), and trial cost allocations.

Chartered Accountant Auditing & Form 3CLA

An independent Chartered Accountant must audit the separate R&D accounts annually. The CA certifies the expenditures in **Form 3CLA**, which is submitted to the DSIR to generate the official **Form 3CL** report sent to the Income Tax Department.