In a bid to bolster the startup ecosystem in the country, the Indian government is now looking to bring additional tax incentives for startups with the upcoming budget.
The Department for Promotion of Industry and Internal Trade (DPIIT) has suggested several measures to the finance ministry for start-ups in the budget.
The recommendations include extension of tax incentives to incubators supported under Atal Innovation Mission; reduction in GST (Goods and Services Tax) rates on AIF (alternate investment fund) management fees and tax benefits on ESOPs, they said.
Start-ups need talented workforce and ESOPs are one of the best options to attract skilled people as giving just high cash payout add to the burden on cash-starved enterprises, industry players said.
Tiger Global-backed tea cafe chain Chaayos founder Nitin Saluja said that there should be less tax on ESOPs.
“It should attract as little tax as possible. ESOPs are one of the best options for startups at their early stages,” Saluja said.
Further fees charged by fund manager of AIF domiciled in India is liable to 18 percent GST as it qualifies as a taxable supply.
Startup India initiative of the government aims at fostering entrepreneurship and promoting innovation by creating an ecosystem that is conducive to growth of budding entrepreneurs.