Lok Sabha Question No. 564 (UNSTARRED), answered on 2020-09-16
Subject: Startup Companies
Ministry: COMMERCE AND INDUSTRY
Asked by: Ranjeetsingh Naik Nimbalkar

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY DEPARTMENT FOR PROMOTION OF INDUSTRY AND INTERNAL TRADE

## LOK SABHA

## UNSTARRED QUESTION NO. 564. TO BE ANSWERED ON WEDNESDAY, THE 16 TH  SEPTEMBER, 2020.

## STARTUP COMPANIES

## 564.   SHRI RANJEETSINGH HINDURAO NAIK NIMBALKAR:

Will the Minister of COMMERCE AND INDUSTRY be pleased to state:

## वाणिज्य एवं उद्योग मंत्री

- (a) whether  the  Government  has  set  any  target  to  provide  tax  concessions  to Startup  in  order  to  provide  employment  opportunity  to  the  youths  of  the country;
- (b) if so, the details of the Startup Schemes;
- (c) whether the Government has allocated any budget for Startup;
- (d) if so, the funds allocated alongwith the details thereof, State-wise; and
- (e) the details of the employment under the said Scheme, State-wise?

## ANSWER वाणिज्य  एवं उद्योग मंत्री (श्री पीयूष गोयल) THE MINISTER OF COMMERCE & INDUSTRY (SHRI  PIYUSH GOYAL)

- (a) & (b): No  targets  have  been  set  for  providing  tax  exemptions  to  startups. Details of    various provisions under which tax exemptions are granted are at Annexure-1.
- (c) & (d): The Cabinet approved  establishment of  a Fund of Funds for Startups (FFS) with a total corpus of Rs. 10,000 crore, with contribution spread over the 14 th & 15 th Finance Commission cycles based on progress of implementation  and  availability  of   funds.The  FFS  contributes  to  the corpus  of  Alternative  Investment  Funds  (AIFs)  for  investing  in  equity and  equity  linked  instruments  of  various  start-ups.FFS  is  operational and is managed by SIDBI.

An amount  Rs.1322.05 cr stands released to SIDBI till 9th September 2020. Out of which Rs.500 cr was released in 2015-16; Rs.100 cr was released in 2016-17; Rs.431.3044 cr released in 2019-20 and Rs.290.75 cr was released in 2020-21. Rs.1054.97 cr was provisioned under FFS for BE 2020-21. Funds are not allocated State-wise.

(e): As  of 6 th September  2020,  total of  36,106  startups  have  been recognized  by  DPIIT    and  4,22,986  total  employment  has  been reported by 34,267 startups. The State/ UT    wise breakup of number of jobs created as reported by startups is attached as Annexure-II.

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## ANNEXURE REFERRED TO IN REPLY TO LOK SABHA UNSTARRED QUESTION NO. 564 FOR ANSWER ON 16.09.2020.

## i. Income Tax Exemption to Startups for 3 years

The  provisions  of  section  80-IAC  of  the  Income  Tax  Act  provide  for  a deduction of an amount equal to 100% of the profits and gains derived from an  eligible  business  by  an  eligible  start-up  for  3  consecutive  assessment years  out  of  7  years,  at  the  option  of  the  assessee,  subject  to  certain conditions.

The Finance Act, 2020 provides for an amendment to section 80-IAC of the Income Tax Act so as to provide that the deduction under the said section 80-IAC shall be available to an eligible start-up for a period of 3 consecutive assessment  years  out  of  10  years  beginning  from  the  year  in  which  it  is incorporated. This amendment will take effect from 1st April 2021 and will, accordingly, apply in relation to the assessment year 2021-22 and subsequent assessment years.

To avail these benefits, a Startup must get a Certificate of Eligibility from the Inter-Ministerial Board (IMB). The Board comprises of Joint Secretary, DPIIT, Representative of Department of Biotechnology, and Representative of Department of Science & Technology.

296 startups have been granted income tax exemptions till 45 th IMB meeting.

## ii. Tax Exemption on Investments above Fair Market Value

DPIIT recognized startups are exempt from tax under Section 56(2)(viib)     of  the  Income  Tax  Act  when  such  a  Startup  receives  any consideration for issue of shares which exceeds the Fair Market Value of such shares. The startup has to file a duly signed declaration in Form 2 to DPIIT {as per DPIIT notification G.S.R. 127 (E) dated 19th February 2019} to  claim  the  exemption from the provisions of Section 56(2) (viib) of the Income Tax Act.

As  of  7th  September  2020,  with  regard  to  declarations  received from entities, furnished in Form 2, intimation regarding receipt of Declaration in Form 2 has been mailed in the cases of 2930 entities.

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## ANNEXURE-II ANNEXURE REFERRED TO IN REPLY TO LOK SABHA UNSTARRED QUESTION NO. 564 FOR ANSWER ON 16.09.2020.

| State/ UT                                |   Employees (self-reported) |
|------------------------------------------|-----------------------------|
| Maharashtra                              |                       80714 |
| Karnataka                                |                       71533 |
| Delhi                                    |                       49497 |
| Uttar Pradesh                            |                       33803 |
| Haryana                                  |                       29770 |
| Telangana                                |                       26013 |
| Gujarat                                  |                       24770 |
| Tamil Nadu                               |                       22632 |
| Kerala                                   |                       13493 |
| Rajasthan                                |                       12510 |
| West Bengal                              |                       10831 |
| Madhya Pradesh                           |                        9944 |
| Odisha                                   |                        6733 |
| Andhra Pradesh                           |                        6640 |
| Bihar                                    |                        4411 |
| Chhattisgarh                             |                        3406 |
| Punjab                                   |                        3225 |
| Assam                                    |                        2500 |
| Jharkhand                                |                        2343 |
| Uttarakhand                              |                        2331 |
| Jammu and Kashmir                        |                        1269 |
| Chandigarh                               |                        1207 |
| Goa                                      |                        1161 |
| Himachal Pradesh                         |                         721 |
| Tripura                                  |                         465 |
| Pondicherry                              |                         372 |
| Manipur                                  |                         217 |
| Dadra and Nagar Haveli and Daman and Diu |                         165 |
| Andaman and Nicobar Islands              |                         120 |
| Nagaland                                 |                          54 |
| Mizoram                                  |                          52 |
| Meghalaya                                |                          34 |
| Arunachal Pradesh                        |                          22 |
| Sikkim                                   |                          12 |
| Ladakh                                   |                           9 |
| Lakshadweep                              |                           7 |

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