NEW DELHI: Employees of start-ups will now be able to reap the tax benefits given on employee stock option plan, as the Department for Promotion of Industry and Internal Trade (DPIIT) has put in place 10 boards to expedite the process of certification required to be eligible for tax exemptions, Sanjay Malhotra, Revenue Secretary said in an interaction with this newspaper.
Many people have not been able to avail the benefit of deferred tax payment on ESOPs due to conditions imposed for certification by the DPIIT. “DPIIT has now put in place 10 boards to fast-track the certification process. Earlier, there used to be only one board. A very small number of start-ups have so far got this approval. But now, the certification process will be expedited and by March-end, hopefully, many of the start-ups will get the certificates,” Malhotra said.
In order to be eligible for claiming tax benefits, start-ups need to be recognised by DPIIT, then they have to get certificates from the inter-ministerial board set up by the DPIIT. The board validates start-ups for the income tax exemption on profits under section 80-IAC of the income tax act.
According to the DPIIT secretary, out of the total applications of 2,500 for 80-IAC, only 400 had been cleared, but with the creation of 10 parallel boards, in the last two months, the approvals have gone up to nearly 1,100.
“Hopefully, by March or April, we will finish the 100% pendency because we have multiplied our workforce by 10 times,” he said. According to the Startup India website, out of 6.15 lakh start-ups, more than 90,000 start-ups have received DPIIT recognition and 1,048 have received income tax exemptions.