UPSC Prelims Practice Questions — Enhanced tax sops for R&D on pharma budget wish list

Question 1

Which one of the following is the apex export promotion council, set up under the Department of Commerce, that has spearheaded the Indian pharmaceutical sector's pre-Budget 2026–27 demand for restoration of weighted R&D deductions?

Accepted Answer

Pharmaceuticals Export Promotion Council of India (Pharmexcil)

Answer

Indian Pharmaceutical Alliance (IPA)

Answer

Organisation of Pharmaceutical Producers of India (OPPI)

Answer

Federation of Pharma Entrepreneurs (FOPE)

Question 2

With reference to the Scheme for Promotion of Research and Innovation in Pharma-MedTech Sector (PRIP), consider the following statements:
1. It has an approved outlay of ₹5,000 crore.
2. Component A of the scheme finances setting up of Centres of Excellence at the National Institutes of Pharmaceutical Education and Research (NIPERs).
3. It is implemented by the Department of Pharmaceuticals under the Ministry of Chemicals and Fertilizers.
4. It seeks to catalyse around 300 industry/start-up projects with an aggregate R&D investment of about ₹11,000 crore.
Which of the above is/are correctly identified?

Accepted Answer

1, 2, 3 and 4

Answer

1 and 2 only

Answer

2, 3 and 4 only

Answer

1, 3 and 4 only

Question 3

With reference to the deduction available under Section 35(2AB) of the Income Tax Act, 1961, in its current form as compared with its earlier form, consider the following statements:
1. The weighted deduction, which was once enhanced to 200%, has been progressively reduced and currently stands at 100% of the eligible expenditure.
2. The benefit is available only in respect of an in-house R&D facility approved by the Department of Scientific and Industrial Research (DSIR).
3. The deduction is currently available to companies as well as to limited liability partnerships and proprietorship firms in the pharmaceutical sector.
Which of the statements given above is/are correct?

Accepted Answer

1 and 2 only

Answer

2 and 3 only

Answer

1 and 3 only

Answer

1, 2 and 3

Question 4

With reference to the Production Linked Incentive (PLI) Scheme for Pharmaceuticals, consider the following statements:
1. It has a financial outlay of ₹15,000 crore.
2. It is implemented by the Department of Pharmaceuticals under the Ministry of Chemicals and Fertilizers.
3. The scheme is operational for a tenure of three years from FY 2023–24 to FY 2025–26.
4. As of September 2025, the cumulative investment realised under the scheme has fallen short of the committed investment target of ₹17,275 crore.
Which of the statements given above is/are NOT correct?

Accepted Answer

3 and 4

Answer

1 and 2

Answer

2 and 3

Answer

4 only

Question 5

In the context of Section 35(2AB) of the Income Tax Act, 1961, what is meant by a 'weighted deduction' for in-house R&D expenditure?

Accepted Answer

A deduction permitted at a percentage of the eligible R&D expenditure that is higher than 100% of the actual expenditure incurred

Answer

A tax credit equal to a fixed percentage of the corporate tax payable, scaled by the company's R&D intensity

Answer

An accelerated depreciation allowance on plant and machinery used exclusively for scientific research

Answer

A presumptive deduction computed as a fixed percentage of the company's turnover, scaled by its export share

UPSC Prelims Practice Questions — Enhanced tax sops for R&D on pharma budget wish list

Q1. Which one of the following is the apex export promotion council, set up under the Department of Commerce, that has spearheaded the Indian pharmaceutical sector's pre-Budget 2026–27 demand for restoration of weighted R&D deductions?

Q5. In the context of Section 35(2AB) of the Income Tax Act, 1961, what is meant by a 'weighted deduction' for in-house R&D expenditure?