PLI Pharma Eligibility + Quarterly Claim Tracker

The Production-Linked Incentive scheme for Pharmaceuticals with a total outlay of Rs 15,000 crore is administered by the Department of Pharmaceuticals (DoP) under the Ministry of Chemicals and Fertilizers. The scheme was notified in March 2021 and covers a six-year incentive window that begins in FY 2020-21 (Year 1) and runs through FY 2025-26 (Year 6), with the actual incentive-earning years for each individual applicant depending on the specific approval date of that applicant. The scheme classifies eligible pharmaceutical products into three categories and pays an incentive as a percentage of incremental sales computed against a Base Year of FY 2019-20. Category 1 covers biopharmaceuticals, complex generics, patented drugs and drugs going off-patent, cell-and-gene-therapy products, orphan drugs and drugs for rare diseases. Category 2 covers Active Pharmaceutical Ingredients (APIs), Key Starting Materials (KSMs) and Drug Intermediates (DIs) whose domestic manufacture is being encouraged. Category 3 covers Repurposed Drugs, In-Vitro Diagnostic Devices (IVDs) and other drugs not covered under Category 1 or Category 2. Applicants who received approval under the scheme include Biocon Biologics (Category 1 biosimilars), Alkem Laboratories (Category 1), Zydus Lifesciences (Category 1), Torrent Pharmaceuticals (Category 1 complex generics), Cipla (Category 1), Ipca Laboratories (Category 1), Suven Life Sciences (Category 2/3 mix), Neuland Laboratories (Category 2 KSMs and APIs), Divi's Laboratories (Category 2 bulk drugs), Aurobindo Pharma (Category 2 KSMs) and Wockhardt (Category 3 devices), among others. The eligibility perimeter is product-specific — a single company can hold PLI approvals under different categories for different product baskets, and each approval-basket has its own baseline and incremental-sales computation.

The three categories differ in three respects — the product coverage, the incentive-rate schedule across the six-year window, and the presence or absence of a per-year cap. Category 1 covers biopharmaceuticals, complex generics, patented drugs and drugs going off-patent, cell-and-gene-therapy products, orphan drugs and drugs for rare diseases. The incentive rate is 10 percent of incremental sales for each of Years 1, 2, 3 and 4, then 8 percent for Year 5 and 6 percent for Year 6. There is a per-year per-applicant cap of Rs 100 crore during Years 1 through 4 — this cap does not apply in Years 5 and 6. Category 2 covers APIs, KSMs and Drug Intermediates identified for domestic manufacturing push, including the 41 identified critical starting materials complementing the Bulk Drug Park scheme's 53 critical API list. The incentive rate is 10 percent for Years 1 and 2, then 8 percent for Years 3 and 4, then 6 percent for Years 5 and 6. Category 2 does not have the per-year Rs 100 crore cap but does carry a Domestic Value Addition (DVA) test — the applicant must maintain a minimum 50 percent DVA at the ex-factory-value level to remain eligible for the incentive. Category 3 is a catch-all covering In-Vitro Diagnostic Devices, Repurposed Drugs and other drugs not falling into Category 1 or Category 2. The Category 3 incentive rate is a flat 5 percent across all six years of the window. This tool lets the finance team run the same product-basket incremental-sales input under all three categories side-by-side to see which category delivers the highest six-year cumulative payout — useful for pre-application category-election decisions where the product basket could plausibly qualify under more than one category.

Domestic Value Addition is the percentage share of an eligible product's Ex-Factory Value that is attributable to Indian-origin materials, labour and overhead — that is, the share that is NOT attributable to imported inputs. The DoP guideline formula is DVA percent equals (Ex-Factory Value minus Value of Imported Inputs) divided by Ex-Factory Value multiplied by 100. Ex-Factory Value is the sale value of the eligible product at the factory gate before dispatch and before packaging-and-forwarding, computed as per the CGST Act 2017 Section 15 transaction-value framework and consistent with the ex-factory value used for Central Excise assessment. Value of Imported Inputs is the assessable value of all imported goods (raw materials, intermediates, catalysts, packaging where imported) that went into producing the eligible product, computed on the Customs assessable-value basis (CIF plus landing charges plus applicable duties as per Customs Valuation Rules 2007). The 50 percent minimum DVA threshold is a Category-2-specific eligibility test — it does not apply to Category 1 or Category 3. If a Category 2 KSM applicant's DVA falls below 50 percent in a given year, the entire Section 35(2AB) equivalent PLI incentive claim for that year is blocked to zero for the affected product-basket. The DVA is computed per year on a product-basket-level average, so if a KSM basket has multiple SKUs with different DVA profiles, the weighted average by ex-factory value is what the DoP tests against. This tool includes the DVA computation for Category 2 applicants and shows a green flag (threshold met) or a red flag (threshold not met, incentive blocked) alongside the incremental-sales output. Where the DVA is marginally above 50 percent, the tool also highlights the volatility risk — a change in raw-material import mix mid-year can push the DVA below 50 percent and trigger a full-year clawback at the DoP verification stage.

The DoP portal for PLI claims is at pliportal.pharmaceuticals.gov.in. Approved applicants log in with the credentials issued at the time of approval and file a quarterly claim submission after the end of each quarter. The quarterly submission contains the incremental sales evidence (invoice-level and GSTR-1-tied), the domestic value addition workings (Category 2 only), the audited ex-factory value schedule, the imported-input customs BOE (Bill of Entry) trail and the DSIR-empanelled or scheme-empanelled Chartered Accountant certification of the quantum. Each quarter's claim goes through a four-stage lifecycle inside the DoP portal — Submitted (received at portal), In Verification (DoP scrutiny team is reviewing), Sanctioned (approval issued, quantum finalised) and Disbursed (bank transfer executed). The typical lag from Submitted to Disbursed is 6 to 12 months, though outlier cases have taken longer where verification queries required multiple rounds of response. Ind AS 20 (Government Grants) governs the income recognition of the PLI incentive. The standard permits two approaches — the income approach (recognise the grant in the P&L over the periods in which the entity recognises as expenses the related costs for which the grants are intended to compensate) or the capital approach (credit the grant directly to equity). Indian pharma applicants overwhelmingly follow the income approach. Within the income approach, an entity policy choice arises between (a) accrual basis, where the grant is recognised as income in the period the eligibility criteria are met — typically at year-end when the audited incremental-sales figure is available and reasonably certain, subject to the Ind AS 20 "reasonable assurance" test in paragraphs 7 and 10 — and (b) cash basis, where the grant is recognised only when the DoP disbursement is actually received. Most listed pharma applicants have policied accrual basis for consistency with matching principle. This tool shows the six-year incremental-sales and incentive quantum on accrual basis (year-of-earn) and separately shows the DoP portal quarterly claim lag so the finance team can quantify the working-capital exposure (accrued receivable pending DoP verification) at any given period end.

No. Section 115BAA of the Income-tax Act 2025 (formerly Section 115BAA of the Income-tax Act 1961) allows a domestic company to opt for a concessional corporate tax rate of 22 percent (effective 25.17 percent including surcharge and cess) in place of the standard 30 percent rate, subject to the surrender of certain enumerated exemptions and deductions. The enumerated surrendered benefits include Section 35(2AB) weighted deduction on scientific research expenditure, Section 35CCC and 35CCD deductions, Section 33ABA (Site Restoration Fund), Section 35AD (specified business capex), the Chapter VI-A Part C deductions (with the exception of Section 80JJAA on new-employment cost and Section 80M on inter-corporate dividends), and the carry-forward of MAT credit under Section 115JAA. The PLI Pharma incentive is NOT on the Section 115BAA surrendered-benefits list. The PLI incentive is a Production-Linked Incentive administered by the Department of Pharmaceuticals under a separate statutory framework (Ministry of Chemicals and Fertilizers scheme notification), it is treated as government grant income under Ind AS 20 (not as a tax deduction or tax exemption), and it flows through as taxable income in the year of accrual (or receipt, depending on the entity's Ind AS 20 policy). A domestic pharma company that has opted for Section 115BAA continues to be eligible for the PLI incentive on its incremental sales — only the Section 35(2AB) R&D weighted deduction is surrendered. This is a critical distinction because pharma R&D-heavy applicants often assume that opting into the 22 percent concessional rate would compromise their PLI eligibility as well — that assumption is wrong. Under the current 100 percent Section 35(2AB) rate (down from 200 percent in FY 2016-17 and 150 percent in FY 2019-20), the incremental benefit of Section 35(2AB) above the normal Section 37 revenue deduction is zero, so most R&D-heavy pharma applicants have moved to Section 115BAA and continue to earn the PLI incentive undisturbed. The tool separately flags the Section 115BAA interaction and confirms that the PLI eligibility is preserved.