April 17, 2023
2 mins read

G20 may agree on defining startups

The definition has a crucial impact on government schemes, tax exemptions, and incentives…reports Asian Lite News

G20 nations are expected to agree on a common definition for startups by July, enabling effective policymaking across members and potentially resolving current challenges surrounding the valuation and taxation of startups, Indian government officials said.

The foundation and alliances working group under the Startup-20 Engagement Group, created during India’s G20 presidency in 2023, is leading discussions to establish consistent terminology across member nations to define investments, funding, and other related terms for startups in the ecosystem.

“We already have had two discussions on it, and we are hoping we will come out with a single communique by the fourth meeting that will define startups uniformly across G20 countries. It should be out by 3-4 July,” a government official said.

India’s department for promotion of industry and internal trade (DPIIT) currently defines a startup as an entity up to 10 years from its incorporation date, with sales of less than ₹100 crore in any financial year. There are over 97,000 recognized startups under DPIIT.

The definition has a crucial impact on government schemes, tax exemptions, and incentives. Therefore, any change in the definition could have significant consequences for the startup ecosystem, particularly concerning valuations and taxation.

“Such a definition will impact policymaking…Any startup which wants to raise money wants to do that on a higher value. But they will be taxed more [under] income tax. That is the issue. But the idea of a startup is to get valuations on future growth prospects. So the two arms of the government need to sit and talk,” the official said, requesting anonymity.

Meanwhile, the government is working to resolve concerns regarding the angel tax levied on the capital raised by an unlisted company by selling shares to investors above the fair market value.

Officials said harmonizing norms for the global startup ecosystem could resolve the differences between how startups are valued by global markets and how they are valued for taxation. These challenges are particularly relevant for India’s startup ecosystem amid tightening global liquidity conditions.

Funding for Indian startups fell over 75% to $2.8 billion in the March quarter, according to market intelligence platform Tracxn, compared to $11.9 billion the year earlier. Moreover, at least 11 tech startups laid off 1,400 workers in the first two weeks of 2023, accounting for 7.3% of the total layoffs by startups in 2022 as companies attempt to cut costs amid economic uncertainty.

ALSO READ-Varanasi gears up to host 3-day G20 summit

Previous Story

G20 expert group kicks off work on reforming MDBs

Next Story

Kashmir is not the same anymore

Latest from -Top News

DRDO displays Pralay Weapon System, Raksha Kavachk

The Pralay weapon system is led by the Project Director Dr R Srinivasan, Scientist ‘G’ and seconded by Deputy Project Director D Ravikumar, Scientist ‘E’…reports Asian Lite News Premier defence research agency

IAF soars high with dazzling air display

The ceremony culminated with the national anthem and the release of balloons carrying banners with the official logo depicting 76 years of enactment of the Constitution in both English and Hindi…reports Asian

‘Protecting Constitution is of utmost importance’

Kharge also criticized Union Home Minister Amit Shah, for insulting the Constitution and its creators. He expressed concerns about the country’s economic decline, slipping from fourth to fifth position globally…reports Asian Lite
Go toTop

Don't Miss

G20 an Opportunity for to Showcase India’s Global Leadership

Though Putin is not attending, Foreign Minister Sergey Lavrov will

G20 Summit in Kashmir set to give massive fillip to tourism sector

“This is a great opportunity to showcase the real potential