ITO Section 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 1[activity] 2[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 –

(a) in the acquisition of any depreciable asset or intangible;
(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 1[Board] as conducting scientific research in Pakistan.