The Union Government plans to exempt startups from service tax and excise duties for a specific period, until their revenues reach a certain threshold.
According to an Economic Times report, a group of ministers chaired by Jayant Sinha, minister of state for finance along with ministries of science and technology, corporate affairs and the department of electronics and IT are considering a one stop registration for all startups which will also make them eligible for government grants.
Startups which get registered under the department of science and technology and are certified as bonafide will be exempted from service tax and excise duties. Presently, technology startups paid service tax at the rate of 12.36% along with excise duty and income tax. The startups will also become eligible for grants of up to 10 crore from the Department of Science and Technology, once the proposal is enacted upon. The surprise package for startups does not end here, the proposal under consideration also plan to simplify process of starting up as well as running a business.
Harkesh Mittal, secretary in the department of science and technology said the proposal is in its early stages and declined to give out any details about the proposal.
Nasscom too had proposed a three year moratorium to the government on quarterly regulatory filings and taxes so that India’s young companies can scale up fast. “Service tax exemption is a much needed proposition. But sops should be more broad-based as majority of successful start-ups are not registered with DST affiliated incubators,” said Ravi Gururaj, chairman at Nasscom Product Council.
Finance minister Arun Jaitley in 2014 had announced an interim budget of 10,000 crore fund for startups.
The move is also expected to ease the shutting down of failed startups.