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Startups want clarity in tax-related issues

During a recent meeting with Finance Minister Smt. Nirmala Sitharaman and senior tax officials, a number of startups have urged the government to provide clarity on key tax issues, including ‘significant economic presence’, equalisation levy and tax on employee stock ownership plans (esops). Startups dealing with global technology companies registered outside India assert that they pay more taxes on their revenues. Currently, startups pay 18% Goods and Services Tax (GST) under the reverse charge mechanism, and a 6% equalisation levy.

“Early-stage startups could benefit from some relief on GST under reverse charge as, with 18% GST and 6% equalisation levy, seed startups who are in losses end up paying an additional 24%, which they won’t if they were located outside India,” stated Sachin Taparia, chairman of LocalCircles.