Indian Government May Exempt Startups From Excise Duty and Service Tax
Startups are the foundation of a developing nation and such businesses need to be encouraged. Indian Government has taken a praise-worthy step and is ready to extend support to the India-based startup companies. The Union Government is planning to exempt the budding firms from service tax and exercise duty for a specific period, so that they don’t fail because of money issues.
As per a report by Economic Times, an inter-ministerial group is considering a one-stop registration scheme that will make them eligible for government grants. The group includes Ministry of Science and Technology, Corporate Affairs and the Department of Electronics and IT, and was chaired by Jayant Sinha, Minister of State for Finance. Meanwhile, the proposal is under consideration.
Under this scheme, the startups that are registered under Department of Science and Technology and the ones certified as ‘bonafide’ will be exempted from the above said taxes. This tax waiver will be applicable until they reach certain revenue. Meanwhile, these tech startups pay service tax at the rate of 12.36% along with exercise duty and income tax. Also, if the proposal is enacted, the startups will become eligible for grants up to Rs. 10 crore from the government’s science and technology department.
Nasscom has proposed a three-year moratorium on quarterly regulatory filings and taxes to the government. This will give a boost to the India’s young companies. “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,” commented Nasscom Product Council Chairman Ravi Gururaj.
The startups in India are burdened by bad regulations and the pattern needs to be altered. The new proposal will have flexible regulations for budding as well as failed start-ups. The failed ones can shut down in a day with just a single page submission. Moreover, it would be a big step in favour of low-budget budding firms to grow and flourish in their respective industries without any pressure.