Startups with a turnover of more than Rs 25 crore may be required to pay income tax despite them being eligible for the three-year tax holiday announced by the government, The Economic Times reported.
Recommended ArticlesView All
Delhi fails to get a mayor for third time — What's the issue and what happens next
Feb 6, 2023 IST4 Min(s) Read
India opposes Hindustan Zinc's buyout of Vedanta's global zinc assets: Exclusive
Feb 6, 2023 IST2 Min(s) Read
Vodafone-Idea Saga — Three parents but none to love
Feb 6, 2023 IST6 Min(s) Read
World Cancer Day 2023: Early detection is crucial for reducing the global burden
Feb 4, 2023 IST5 Min(s) Read
The threshold for exemption remains at Rs 25 crore and has not been risen to Rs 100 crore in accordance with the Department for Promotion of Industry and Internal Trade (DPIIT), the report said, adding that Indian startups exceeding the turnover threshold may have to pay more interest rates with taxes, in addition to losing out on the tax holiday.
“Clarity is needed urgently as the September 1 deadline to file returns is nearing,” the chief financial officer of a tech startup told the paper.
“The different turnover thresholds specified for qualifying as an eligible startup in the DPIIT circular vis-a-vis under income tax law is a mismatch and should be addressed at the earliest,” Vikas Vasal, national leader (tax), Grant Thornton India told ET.
Under the Income Tax Act, Indian startups broadly enjoy two benefits: 1) Section 80 IAC that "allows 100 percent deduction in respect of profits and gains for any three out of seven consecutive years beginning from the year in which a startup is incorporated". 2) Section 56(2)(vii) (b) allows "exemption from the tax being levied on the share premium received in excess of the fair market value, which stemmed from protests over the so-called angel tax".