In a concerning revelation, less than 5% of the 1,869 startups in Andhra Pradesh, recognized by the Department for Promotion of Industry and Internal Trade (DPIIT), have received Income-Tax exemptions from the Union Government under the Startup India scheme, according to industry sources.
As of December 31, 2023, only a meagre 50 startups from Andhra Pradesh out of the total 2,975 recognized across the country have benefited from tax incentives, highlighting a significant gap in the implementation of the scheme in the state, reported The Hindu.
Of the startups in Andhra Pradesh, a noteworthy 884 are led by women, showcasing a commendable gender representation in the entrepreneurial landscape. The state’s startup ecosystem is primarily dominated by the Construction & Engineering sector, constituting 19% of the startups, followed by Application Development (16.2%), IT Consulting (14.8%), Agritech (13.8%), and Food Processing (12.8%).
However, despite these numbers, only DPIIT-recognized startups are eligible to apply for tax exemptions under 80-IAC of the Income Tax Act and Section 56 of the Income Tax (Angel Tax) Act. Upon clearance, startups can enjoy a tax holiday for three consecutive financial years within the first decade of their incorporation.
An entity qualifies for specific benefits if it attains the status of an ‘Eligible Start-up,’ and to achieve this designation, the entity must fulfil various conditions outlined in Notification No. GSR 127(E), dated 19-2-2019, issued by the DPIIT.
While additional conditions exist for claiming particular benefits or relief under the Income-tax Act, it is imperative for an entity to be officially recognized by the DPIIT to be eligible for such benefits.
The following benefits shall be available to an eligible start-up recognised by the DPIIT:
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