Less than 5% of Andhra Pradesh’s 1,869 startups recognised by the Department for Promotion of Industry and Internal Trade (DPIIT) have received Income-Tax exemptions from the Union Government under its Startup India scheme, according to industry sources.
The number of recognised startups getting tax benefits across the country as on December 31, 2023, was 2,975, and fewer than 50 of them were from Andhra Pradesh, the sources said.
Of the 1,869 startups in the State, 884 are led by women. The State has the largest number of startups (19%) in the Construction & Engineering sector, followed by Application Development (16.2%), IT Consulting (14.8%), Agritech (13.8%) and Food Processing (12.8%).
“While 1.18 lakh startups were recognised by the DPIIT as of December 31, 2023, only 2,975 received I-T exemptions. Tax exemptions are aimed at giving a boost to the sector. More importantly, a large number of startups have been recognised by the DPIIT in the last three to four years,” an official told The Hindu on Wednesday on condition of anonymity.
Only DPIIT-recognised startups are eligible to apply for tax exemption under 80-IAC of the I-T Act and under Section 56 of the Income Tax (Angel Tax) Act. After getting clearance for tax exemption, the startup can avail of tax holiday for three consecutive financial years in the first 10 years from incorporation.
The eligibility criteria for applying for Angel Tax exemption is that the entity should be a recognised startup, be it a private limited or a limited liability partnership, and the startup should have been incorporated after April 1, 2016.
However, the eligibility criteria for startup recognition is that its turnover in any of the previous financial years should not be less than ₹100 crore. It should work towards innovation and should have the potential for creation of employment and wealth.
