# Section 35: Scientific Research Expenditure
Section 35 incentivises spend on R&D. Deductions are bifurcated based on:
- Who does the research — the assessee himself (in-house) or some other approved entity (contribution).
- Type of spend — capital or revenue.
- When — before or after commencement of business.
## Branch A — In-House Research
### (1) Expenditure BEFORE Commencement of Business
Allowed for spends in the 3 preceding years before the date of commencement.
| Type of Expenditure | Allowed? |
|---|---|
| Capital expenditure on land | ✗ Not allowed |
| Other capital expenditure (e.g., building, equipment) | ✓ Allowed (100%) |
| Revenue expenses on Salary (excluding perquisites) | ✓ Allowed |
| Revenue expenses on Material | ✓ Allowed |
| Other revenue expenses (rent, utilities, etc.) | ✗ Not allowed |
### (2) Expenditure AFTER Commencement of Business — All Assessees
| Sub-section | Nature | Deduction |
|---|---|---|
| Sec 35(1)(i) | Revenue R&D expenditure | 100% allowed |
| Sec 35(1)(iv) | Capital R&D expenditure (except land) | 100% allowed |
## Branch B — Contribution to Others (100% Allowed)
| Recipient | Section | Type of research |
|---|---|---|
| IIT / National laboratory | Sec 35(2AA) | Scientific |
| Approved Indian company engaged in R&D | Sec 35(1)(iia) | Scientific |
| Approved college / institute / university / research association | Sec 35(1)(ii) | Scientific |
| Approved institution | Sec 35(1)(iii) | Social & Statistical |
All the above contributions get 100% weighted deduction.
## Important Notes
1. If deduction under Sec 35 is claimed on a capital asset, depreciation will NOT be allowed on the same asset (no double benefit).
2. If Land & Building are purchased under a composite agreement, cost must be bifurcated based on FMV — the land portion is disallowed, building portion is allowed.