By TIOL News Service

NEW DELHI, APRIL 12, 2018: IN a major relief for entrepreneurs, the Department of Industrial Policy and Promotion (DIPP) has issued gazette notification No 364(E) dated April 11, 2018 constituting a broad based Inter-Ministerial Board (IMB) to consider applications of Startups for claim of tax incentives as follows:

1. Exemption from levy of income tax on share premium received by eligible Startups under section 56 of the Income Tax Act, 1961.

2. 100% deduction of the profits and gains from income of Startups for three out of seven consecutive assessment years under section 80 IAC.

3. Applications for certification of startups under sections 56 and 80 IAC will be submitted through an online portal to DIPP. These applications will be considered by IMB for certification.

4. For the purposes of section 56, there is no restriction on class of investors and eligible startups can receive investment from any person against issue of share capital.

As a continuous endeavour of the Government to facilitate startup eco-system in the country, the DIPP has been holding regular stakeholder consultations including with Government Ministries or Departments, Regulators, Angel investors and Startups. The amendments introduced are meant to address key demand of startups with regard to the tax exemptions.

With the introduction of amendments, the startups are likely to have 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.