Under Start Up India Action plan the government had announced a slew of tax benefits for start-ups.
In the 15 months since Start Up India Action Plan was launched with much pomp and show, with the Prime Minister announcing tax benefits that entrepreneurs could avail of, only 10 start-ups have been approved for receiving these benefits from the Centre.
According to a status report of Start Up India, out of all the applications received by the government, only 10 start-ups passed the stress-test of the Inter-Ministerial Board set up by the government.
The Inter-Ministerial Board (IMB) was set up by the Department of Industrial Policy & Promotion (DIPP) to validate the innovative nature of the business for granting tax related benefits. The IMB constitutes of the Shailendra Singh, Joint Secretary, Department of Industrial Policy & Promotion, Dr Alka Sharma, Director/ Scientist 'F' as a representative of Department of Biotechnology, and H K Mittal, Head, Innovation/ Entrepreneurship and National Science and Technology Entrepreneurship Development Board, as a representative of Department of Science and Technology.
According to the norms laid down under the Start Up India Action Plan, only those start-ups incorporated after April 1, 2016, could be considered for tax benefits. These start-ups have to be certified as an 'eligible business' by the IMB.
These benefits would be a tax holiday for three years out of the first seven since incorporation, up from the earlier five; tax exemptions on capital gains and investments above Fair Market Value, carry forward of MAT further to 15 years from the earlier 10 years, a cut in income tax for companies with annual turnover of up to Rs 50 crore to 25%.
The status report said, 1,662 applications were received to seek 'recognition' from the DIPP. However, out of them "only 146 start-ups can be considered for tax benefits as only these start ups have been incorporated since April 1, 2016," the report said.
These 146 start-ups were considered by the IMB and then "only 10 start ups have been approved for availing tax benefits."
In a report done in October last year, Parul Jain (Partner) and Amit Bablani (Associate Director), BMR & Associates LLP said, as of July 19, 2016, only one start-up had received the required IMB certificate for availing tax benefits. They were quoted in a column for The Economic Times. In it, they said, as of July 19 last year, the DIPP had received only 728 applications out which only 180 had required documents and only 16 were registered after April 1, 2016.
This means, in the seven months since July 19, only 9 other start-ups had received a nod for tax benefits.
The tax holiday for three years out of seven was announced in Budget 2017. While the move was welcomed by start-ups they pointed out a need for a longer period for profit-linked deduction since many start-ups only attain profitability after about ten years, they said.
Manavjeet Singh, Founder and CEO Rubique, a lending marketplace, while welcoming the move had said, "...start-ups are not expected to make profits for the first few years. The need was for a 10-year period but extension to seven years is nonetheless welcome. Arun Kumar, Founder & CEO of Trabaajo, a unique job application start-up, said, "the start-ups were expecting more."
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
 "Representational image")
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}