In the second phase of the inter-ministerial board meeting under the Startup India Action Plan, only one startup has been selected out of 571 applicants. Kanpur-based Bhurak Technologies Pvt. Ltd. has fulfilled the criteria under the same. Incorporated on 7th May, 2016, Bhurak Technologies manufactures domestic appliances. It can now claim a three-year tax benefit under the Startup Action Plan, announced by PM Narendra Modi this year.
A status report by the Ministry of Commerce and Industry said that only 106 applicants had the required documents. Out of the total applications received, only 12 met the criteria of being incorporated after April 1, 2016.
The list will cover seven more startups following execution of the due process. The status report added that the rest of the applicants will be provided guidance and support for submission of relevant documents.
In the first round held in May, 200 applications were received by the DIPP, of which 30 were shortlisted. Amongst those, Hyderabad-based Cygni Energy became the only firm to fulfil the criteria and benefit from the Startup India Action Plan. Apart from receiving the three-year tax benefit, the renewable energy company, founded a year ago, availed benefits to file a patent under the fast-track mode for its inverter-less solar energy technology.
Currently, startups don’t require the stamp of approval from the inter-ministerial board to access legal help in filing patents. This step was taken as a part of an overhaul of the programme last month.
The DIPP is pushing for providing tax benefits to startups for seven years instead of three as per the current plan. The Finance Ministry is considering the proposal.
The government’s Startup Action Plan of January 2016 had stated that with cash constraints and limited financial avenues available to startups, a tax holiday* in the initial years can be helpful.
Earlier, the government also provided tax benefits to the software and information technology industry.
A startup fest, to be organised by the DIPP this September, is also on the cards. The fest will provide a matchmaking platform for startups and investors on a national and international stage.
*A tax holiday is a temporary reduction or elimination of a tax. Governments usually create tax holidays as incentives for business investment.
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