Exemption from service tax equal to R&D cess payable on import of technology :

The amount of Research and development cess payable shall be allowed as a deduction from the service tax payable on the taxable service involving the import of technology.

Conditions to be fulfilled:-

(a) The Research & Development Cess is paid at the time of or before payment for the service subject to maximum of 6 months period from the date of invoice*.

*In case of associated enterprises, the date of credit in the books of account.

(b) Necessary records will have to be maintained so as to establish a linkage between the invoice or the credit entry (as the case may be) and the cess payment challan.

Research and development cess Research and Development cess is levied, on the payment of technical fees/consultancy/ royalty or know-how etc. involving the ‘import of technology‘, under section 3 of the Research & Development Act, 1986. The purpose of levying this cess is to encourage the commercial application of indigenously developed technology. Rate of cess: Rate of research and development cess is 5%.

[Notification No. 14/2012 ST dated 17.03.2012]