DIPP asks IMB to expedite inspections for tax incentives for startups

Income tax exemption for three years in a block of five years for startups was one of the most lucrative incentives in the Budget package announced earlier this year. However, with long delays in scrutinizing and recommendations, the Inter-Ministerial Board (IMB) that examines applications from start-ups for tax concessions is facing flak from all quarters. To fix this, the Department of Industrial Policy & Promotion (DIPP) has urged the board to expedite the process of scrutiny and give its recommendations early.

“The tax breaks are for just three years and not monumental. We have urged the IMB to try and give its decisions early,” a DIPP official told BusinessLine.

So far, the IMB has recommended just one start-up for tax breaks. Two others that have been turned down will be reconsidered once they submit their applications afresh.

“The applicants have not been rejected. It is just that their papers were not in order and we have asked them to apply again with the right documents,” the official said.

The IMB, which comprises of officials from the Department of Science and Technology and the Department of Biotechnology has received 728 applications till date for start-up recognition. Of these, 180 applications are complete and recognized as start-ups by the DIPP.

Speaking at a seminar on Startups “Start-up India States’ Conference” in New Delhi on Saturday, Commerce & Industry Minister Nirmala Sitharaman also said that the Centre is open to examining the option of extending tax breaks to start-ups incorporated before April 1, 2016. Presently, the incentive is only for start-ups incorporated between April 1, 2016, and March 31, 2019.

The Centre has already decided to expedite the process of extending IPR-related benefits to start-ups by requiring them to take a certificate of recognition just from the DIPP and not the IMB. A panel of facilitators has been constituted to assist start-ups in filing applications and DIPP has decided to bear the facilitation cost.

DIPP has also written to top 50 companies requesting them to support the Start-up India initiative under their CSR activities by setting up new incubators in collaboration with educational institutes.