Section 26 of Income Tax Ordinance, 2001 has allowed a deduction for scientific research expenditure incurred in Pakistan in a tax year.
Following is the text of Section 26 of Income Tax Ordinance, 2001:
26. Scientific research expenditure.— (1) A person shall be allowed a deduction for scientific research expenditure incurred in Pakistan in a tax year wholly and exclusively for the purpose of deriving income from business chargeable to tax.
(2) In this section —
“scientific research” means any activity undertaken in Pakistan in the fields of natural or applied science for the development of human knowledge;
“scientific research expenditure” means any expenditure incurred by a person on scientific research undertaken in Pakistan for the purposes of developing the person’s business, including any contribution to a scientific research institution to undertake scientific research for the purposes of the person’s business, other than expenditure incurred –
(b) in the acquisition of immovable property; or
(c) for the purpose of ascertaining the existence, location, extent or quality of a natural deposit; and “scientific research institution” means any institution certified by the Board as conducting scientific research in Pakistan.
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