Proposed FORM 11 is the statutory application and agreement framework governing approval of in-house research and development (R&D) facilities maintained by companies under section 45(2) of the Income-tax Act, 2025. The form facilitates cooperation between the company and the Department of Scientific and Industrial Research (DSIR) and establishes the compliance architecture for in-house R&D incentives.

2. Legislative Framework

Section 45(2) of the Income-tax Act, 2025 provides for deduction in respect of expenditure incurred by a company on an approved in-house research and development facility. Rule 29 of the Income-tax Rules prescribes the procedure, conditions and forms for approval, audit and reporting. FORM 11 operationalises the agreement and approval stage for in-house R&D facilities.

3. Scope and Applicability

FORM 11 applies to companies:

• engaged in biotechnology, or
• engaged in manufacture or production of eligible articles or things (other than those specified in the Thirteenth Schedule),

which maintain or propose to maintain an in-house R&D facility and seek approval under section 45(2).

4. Structure of FORM 11

FORM 11 comprises the following components:

Part A – Particulars of the Company

Captures details of:

• corporate identity and jurisdiction;
• nature of business and products;
• production and R&D expenditure history;
• existing in-house R&D facilities and DSIR recognition;
• proposed scientific research objectives.

Part B – Agreement with DSIR

Sets out the terms of cooperation between the company and DSIR, including:

• maintenance of approved in-house R&D facility;
• audit and reporting obligations;
• cooperation in research activities;
• submission of DSIR reports to tax authorities.

Part C – Declaration and Undertaking

Contains binding undertakings by the company relating to:

• maintenance and audit of accounts;
• furnishing of audited statements with the return of income;
• submission of progress reports and annexures;
• restrictions on disposal of assets;
• compliance with statutory and agreement conditions.

Annexure I and Annexure II provide for detailed facility-wise and expenditure-wise information to be submitted annually.

5. Role of DSIR

DSIR functions as the prescribed authority for evaluation and oversight of in-house R&D facilities. Upon satisfaction regarding feasibility and genuineness of expenditure, DSIR submits its reports to the jurisdictional Chief Commissioner of Income-tax within the prescribed time.

6. Nature and Effect of Approval

Approval under FORM 11 :

• is facility-specific;
• is subject to continued compliance with section 45(2) and Rule 29;
• does not automatically result in allowance of deduction.

Deduction is allowable only upon verification of compliance at the time of processing or assessment.

7. Post-Approval Compliance Obligations

Following approval, the company must:

• maintain separate audited accounts for capital and revenue R&D expenditure;
• submit annual progress and expenditure reports;
• attach audited R&D accounts with the return of income;
• ensure assets are used exclusively for approved purposes;
• furnish requisite information in Annexure I and Annexure II annually.

8. Distinction from Sponsored Research Forms

FORM 11 operates in a distinct regime relating to in-house R&D facilities under section 45(2), whereas Forms 7 to 10 apply to sponsored scientific research programmes under section 45(3)(c).

10. Conclusion

FORM 11 is a foundational instrument in the in-house R&D incentive framework under the Income-tax Act, 2025. Companies seeking benefit under section 45(2) must ensure accurate filing, strict adherence to agreement terms and continuous compliance to safeguard eligibility for deduction.

In-house R&D facility approval framework under income tax law requires DSIR cooperation, audit compliance, and ongoing reporting. FORM 11 sets out the statutory application and agreement framework for approval of in-house research and development facilities under section 45(2) of the Income-tax Act, 2025, read with Rule 29. It applies to eligible companies maintaining or proposing to maintain an in-house R&D facility and requires disclosure of company particulars, a DSIR agreement, and binding undertakings on audit, reporting, asset use, and compliance. Approval is facility-specific and remains subject to continued compliance, with DSIR serving as the prescribed authority for evaluation and oversight.