DIPP shows leniency for tax concession claims by  Start-ups

DIPP shows leniency for tax concession claims by Start-ups

Posted by P. Charitha on May 10th 2017

As part of encouraging the Start-up India Mandate in the country, the Department of Industrial Policy and Promotion (DIPP) recently has gone easy on the policy of rejecting applications for tax sops claims by start-ups.
 
Instead of  an outright dismissal of the proposals that do not meet the mark for tax-sops with a simple ‘rejected’ stamp, the Inter-Ministerial Group (IMG) examining it will give details of where they fell short. This will give the start-ups an opportunity to re-work their proposal and apply again for tax benefits.
 
Constitution of Inter-Ministerial Group (IMG)
An Inter-Ministerial Group - IMG, which includes officials from the Department of Bio-technology, Department of Science and Technology, Ministry of Electronics, IT and Technology and the DIPP, examine the proposals on the basis of innovation and use, and determine whether they qualify for tax sops or not.
 
In the last meeting of the Inter-Ministerial Group (IMG) on start-ups which met on May 1, about a dozen applications were approved. The change in the Central government’s stance has been triggered by a general sense of dissatisfaction among start-ups with the new policy, as only about 10 proposals had qualified for tax sops till last month out of the 140 proposals vetted by the Inter-Ministerial Group (IMG) since the policy was announced in 2016.
 
The 130 applicants for tax applications, who were rejected over 2016, will also get a detailed note on why their cases did not pass the test. As per the existing rules, start-ups (companies and Limited Liability Partnerships or LLPs) can get income tax exemption for three years in a block of seven years, if they are incorporated between April 1, 2016 and March 31, 2019. DIPP is also planning to re-work on the qualification criteria for start-ups for non-tax benefits but there has been no change in the criteria of judging whether a start-up qualifies for tax benefits. It still depends on how innovative the idea is.Source: The Hindu Business Line.

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