The commerce and industry ministry on Friday issued a notification relaxing the guidelines for a company to qualify as a start-up under taxation and other benefits. According to the notification by the ministry, any company within the time period of 7 years from the date of incorporation will be eligible for tax benefits that were earlier extended to companies not older than 5 years. Furthermore, the period has been extended to 10 years for the biotechnology sector start-ups.
According to the notification, the turnover of the company should not exceed Rs 25 crore to reap the benefits under the start-up policy. The recent move is expected to bring in more start-ups under the fold of Stand-up India, Start-up India, an initiative that was announced by the government last year in January.
The decision on the recognition of the start-up will lie with the Department of Industrial Policy and Promotion (DIPP) and the start-ups will be have to submit an application for the same via its portal. To avail the tax benefits extended to a start-up they will have to obtain a certificate of eligibility from the Inter-Ministerial Board of Certification set-up by DIPP. Startups do not need a certification or recognition by any other industrial body or incubator.
“It’s very encouraging to note that the government has finally recognised that scalability, job creation and wealth creation are also legitimate business objectives for a start-up and have extended all benefits to those that satisfy these conditions, instead of the earlier restrictive requirements of being in a new or innovative business,” Abhishek Goenka, partner and leader of Direct Tax at PwC India said.