Parliamentary panel eases criteria for recognised startups to avail tax benefits

economictimes.indiatimes.com:

income tax law as only 1% of recognised entrepreneurs have availed the benefit. The department-related Parliamentary Standing Committee on Commerce has expressed concern about the low utilisation of section 80-IAC of the Income Tax Act, 1961, which entitles eligible startups to avail the tax benefit. It was implemented in 2017.

Despite the existence of 98,119 recognised startups, only 10,165 of them, accounting for just 10.4%, have applied for income tax exemption under this Act. Furthermore, the inter-ministerial board has granted the Certificate of Eligibility to only 1,173 applicants as on March 31, 2023. «This means that even after six years of the implementation of Section 80-IAC of the Income Tax Act, 1961, only 1% of recognised startups have received the Certificate of Eligibility,» the committee said in its report.

The committee recommended that «the eligibility criteria for issuing a certificate of eligibility by the inter-ministerial board for claiming income tax exemptions may be relaxed in consultation with the stakeholders so that more startups could avail the tax benefits under Section 80-IAC of the Income Tax Act». A staggering 75% of applications being sent for resubmission can be attributed to a lack of clarity in the process, it said. «The committee is of the view that the government should work towards making the application processes more transparent and user-friendly,» it said, adding, the government should take special drive to educate startups about the exemptions through awareness programmes and interactions.