Indian Government Turns To Blockchain To Ease Startup Compliance Hurdles

Indian Government Turns To Blockchain To Ease Startup Compliance Hurdles

SUMMARY

Government agencies will be able to access, authenticate or approve documents and data related to startup compliances through the blockchain framework

The framework will allow agencies instant access to documents for verification in tax processes and more

Earlier this year, the government was reported to be forming a panel to formulate a roadmap for regulations and use of blockchain in India

Looking to reduce the compliance burden on startups, the Indian government is reportedly in the process of building a blockchain-based validation framework that could simplify the submission of documents to various agencies. 

At the moment, startups have to make separate submissions to regulators, intermediaries and authorities that increases not only the time related to compliance but also leads to duplication of efforts. 

Central Board of Direct Taxes (CBDT), banks, public sector undertakings (PSUs), non-banking financial companies (NBFCs) and other regulators will be allowed to verify documents before providing financial or other assistance to startups through this single-window blockchain platform. These agencies will be able to access, authenticate or approve documents and data related to startup compliances through this framework.

According to an ET report, the Department for Promotion of Industry and Internal Trade (DPIIT) is currently working on building this system. 

Each DPIIT-recognised startup will have four identifiers, a certificate number, name of the entity, incorporation number and blockchain ID. Using these, any official stakeholder can access documents or applications submitted by startups. 

The platform can be utilised by government departments, PSUs, banks and investors to verify the authenticity of the information submitted by startups, as per an unnamed official quoted in the report. The official claimed this would enable quick turnaround in inter-departmental verification processes.

Under the system, different departments and bodies will be empowered to use the documents for their regulatory purposes.  For instance, PSUs can check certificate authenticity, while the income tax department or CBDT can verify details before granting tax exemptions. Similarly, the government e-Marketplace (GeM) can validate startup certificates before onboarding them as vendors. 

The blockchain-based system is expected to ease data sharing as all documents will be available in a decentralised ledger. 

Reports from earlier this year suggested that the central government is likely to form a fresh panel to formulate a roadmap for regulations and use of blockchain in India. Regulations in blockchain could pave the way for official deployment of projects such as decentralised records and other governance applications. 

For instance, earlier this year, the Election Commission of India said it is working with IIT-Madras for a blockchain-based app to enable electronic or digital voting in official elections. Similarly, in October last year, the Indian government launched a blockchain-based certification verification system, which will enable instant verification and access to certificates of recognition issued by the industry body.

You have reached your limit of free stories
Become An Inc42 Plus Member

Become a Startup Insider in 2024 with Inc42 Plus. Join our exclusive community of 10,000+ founders, investors & operators and stay ahead in India’s startup & business economy.

2 YEAR PLAN
₹19999
₹7999
₹333/Month
Unlock 60% OFF
Cancel Anytime
1 YEAR PLAN
₹9999
₹4999
₹416/Month
Unlock 50% OFF
Cancel Anytime
Already A Member?
Discover Startups & Business Models

Unleash your potential by exploring unlimited articles, trackers, and playbooks. Identify the hottest startup deals, supercharge your innovation projects, and stay updated with expert curation.

Indian Government Turns To Blockchain To Ease Startup Compliance Hurdles-Inc42 Media
How-To’s on Starting & Scaling Up

Empower yourself with comprehensive playbooks, expert analysis, and invaluable insights. Learn to validate ideas, acquire customers, secure funding, and navigate the journey to startup success.

Indian Government Turns To Blockchain To Ease Startup Compliance Hurdles-Inc42 Media
Identify Trends & New Markets

Access 75+ in-depth reports on frontier industries. Gain exclusive market intelligence, understand market landscapes, and decode emerging trends to make informed decisions.

Indian Government Turns To Blockchain To Ease Startup Compliance Hurdles-Inc42 Media
Track & Decode the Investment Landscape

Stay ahead with startup and funding trackers. Analyse investment strategies, profile successful investors, and keep track of upcoming funds, accelerators, and more.

Indian Government Turns To Blockchain To Ease Startup Compliance Hurdles-Inc42 Media
Indian Government Turns To Blockchain To Ease Startup Compliance Hurdles-Inc42 Media
You’re in Good company