April 13, 2018
As an impetus to startups in India, the DIPP (Department of Industrial Policy and Promotion) in its notification dated April 11, 2018 has constituted a board based Inter-Ministerial Board (IMB) to consider applications of Startups for claim of following incentives of the Income Tax Act 1961:
- Exemption from levy of income tax on share premium received by eligible Startups under section 56 of the Act.
- 100% deduction of the profits and gains from income of Startups for three out of seven consecutive assessment years under 80 IAC of the Act.
Applications for certification of startups under section 56 and Section 80 IAC of the Act will be submitted through an online portal to DIPP which would be further considered by IMB for certification.
Read the notification here.
The notification stated that for the purposes of section 56 of the Act, there is no restriction on class of investors and eligible startups can receive investment from any person against issue of share capital.
It is expected that this initiative would aid startups to have an easy access to funding which in turn will ensure ease in starting of new businesses, promote startup eco-system, encourage entrepreneurship leading to more job creation and economic growth in the country.
Government of India launched the ‘Startup India’ initiative in January, 2016 to build a strong eco-system for nurturing innovation and entrepreneurship.