Income Tax Form 14: Approval Order for In-House R&D Facility under Section 45(2)

In the in-house research and development incentive regime under the Income-tax Act, 2025, FORM 14 plays a central role. It is the official approval order issued by the Department of Scientific and Industrial Research (DSIR) for a company’s in-house R&D facility, and is directly linked to the deduction provisions contained in Section 45(2) read with RULE 29 of the Income-tax Rules, 2026.

This document does not function as a return or a statement to be filed with the Income Tax Department; instead, it acts as formal evidence that an in-house R&D facility has been approved by the prescribed authority and is therefore potentially eligible for deduction of qualifying expenditure, subject to fulfilment of all statutory conditions.

Evolution and Position of FORM 14 in the Income Tax Framework

Under the earlier regime of the Income-tax Act, 1961, a similar approval mechanism existed through Form 3CM under Section 35 read with the corresponding rules. With the transition to the Income-tax Act, 2025, the approval mechanism has been recast, and the equivalent instrument is now FORM 14 issued under Section 45(2) and RULE 29.

The new framework aligns the scientific approval process with the updated provisions while retaining the essential policy objective: to promote genuine in-house R&D by granting deductions for expenditure incurred on facilities that satisfy prescribed technical and administrative conditions.

Note: While the nomenclature, section references and rule numbers have changed in the new legislation, the underlying principle remains that deduction is available only in respect of expenditure on an approved in-house R&D facility.

What is FORM 14?

Statutory Nature of FORM 14

FORM 14 is the prescribed order of approval issued by the DSIR for a company’s in-house R&D facility under Section 45(2) of the Income-tax Act, 2025 read with RULE 29 of the Income-tax Rules, 2026. It is the legal instrument that:

  • Confirms that a particular in-house R&D facility of a company has been approved for income tax purposes.
  • Links the approval to the application and recognition process handled by DSIR.
  • Provides a formal basis for the assessee to claim deduction of eligible R&D expenditure under Section 45(2).

FORM 14 is not a form that the assessee submits to any authority; rather, it is an order issued by the prescribed authority which the assessee must retain and rely on while making deduction claims and during assessments or scrutiny.

Purpose and Role of FORM 14

The core purposes of FORM 14 are to:

  • Grant formal approval for an in-house R&D facility operated by a company.
  • Capture the scope of scientific research to be carried out at that facility, including nature and objectives.
  • Tie the approval to DSIR recognition, ensuring that only facilities recognised by DSIR qualify for income tax benefits.
  • Serve as a statutory reference for deduction claims under Section 45(2), subject to compliance with all procedural and substantive conditions.

Important: Possession of FORM 14 alone does not guarantee deduction. The Income Tax Department will still scrutinize whether statutory conditions are satisfied, expenditure is eligible, and all prescribed requirements have been followed.

Who Issues and Receives FORM 14?

Prescribed Authority Under RULE 29

Under RULE 29, the Secretary, Department of Scientific and Industrial Research acts as the prescribed authority empowered to issue FORM 14. Accordingly:

  • The Secretary, DSIR signs and issues the approval order in FORM 14.
  • The order is issued only after DSIR has examined the facility and completed its recognition and approval process as per the prescribed rules.

Recipients of FORM 14

FORM 14 is addressed to, and shared with, specific parties for coordinated administration:

  1. The company (assessee) operating the in-house R&D facility

    • Receives the original approval order.
    • Must retain it as a key document to support deduction claims under Section 45(2).

  2. The Chief Commissioner of Income-tax having jurisdiction over the company

    • Receives a copy of FORM 14.