The Department of Industrial Policy and Promotion (DIPP) has utilised only Rs 4 lakh as on December 31, 2017, out of Rs 10 crore that was allocated to it for the promotion of StartUp India scheme in 2017-18, as has been pointed out by a parliamentary committee in its latest report.
The StartUp India campaign was announced by Prime Minister Narendra Modi on August 15, 2015, to develop a startup ecosystem to boost entrepreneurship across the country, through income tax benefits, easy bank financing, and lesser compliance burden.
“The committee fears that optimal functioning of the Startup India Hub and the call centre was hampered due to such tardy utilisation of funds,”
the Department Related Parliamentary Standing Committee on Commerce said in its report that was released on 14 March.
There has been a “huge gap” between the number of startups receiving funding, tax exemptions and the number of such entities that have been recognised.
“A total of 6,981 startups have been recognised by DIPP as on 06.02.2018 out of which only 99 startups have been funded and 82 startups have been certified for claiming tax exemptions under Income Tax Act, 1961,”
the panel observed in its report.
The DIPP intends to facilitate and support 1,000 startups by March 2019.
The Parliamentary Committee has asked for answers from DIPP about the discrepancy and has asked to take concerted efforts to help the entrepreneurs in every possible way to make the businesses a success.
The proposed Rs 2,000 crore Credit Guarantee Fund for startups, announced in January 2016, “is still in the formulation stage and there has been no progress made as the fund has been again allocated a token amount (of Rs 1 lakh) in Budget Estimate of 2018-19,” it said.
What benefits can the startups expect?
The StartUp India proclaimed by the government in January 2016 announced incentives including a Rs 10,000 crore Fund of Funds (FFS) to be provided by March 2025 by SIDBI, an exemption from paying income tax on profits for three years and exemption from capital gains tax for startups.
An Rs 500-crore per year credit guarantee scheme for startups was also announced to enable them to raise loans without any collateral for business purposes. As on September 15, 2017, SIDBI’s Fund of Fund for StartUps has sanctioned Rs 605.70 crore to 17 funds for investment in 72 entities. But since August, only around Rs, 70 crores was disbursed.
How can a startup get tax benefits?
To obtain tax benefits, a startup is required to be certified as an eligible business from the Inter-Ministerial Board of Certification, comprising a senior official each from DIPP, Department of Science and Technology, Department of Biotechnology and Ministry of Electronics and Information Technology.