Startup India is a flagship initiative introduced by the Government of India in 2016 to build a strong eco-system for nurturing innovation and start-ups in the country that will drive sustainable economic growth and generate large scale employment opportunities. Five years since the launch of the initiative, and amidst a global pandemic, it is quite encouraging to see India count as one of the largest startup ecosystems in the world with 54+ unicorns and over 50,000 recognized startups and generated employment for over 5.50 lakh people.
The Startup India initiative is aimed at promoting financing, simplifying the incorporation process, grant of various tax exemptions and other benefits to startups. These benefits support the startup and are spread over critical period of its life span. One critical compliance for availing such benefits is registration with Department for Promotion of Industry and Internal Trade (DPIIT). An overview of the income tax benefits is shared in the table.
The above benefits give much needed stimulus to the entrepreneurs towards developing their start-ups and further acting as a catalyst for the India growth story.
The Government may look to further incentivise this eco-system by providing a roll-over of the sunset clauses.
(The writer is Director, EY India. Sai Swarnalatha Gannu, Senior tax professional, EY also contributed to the article.Views expressed are personal.)