{"id":14035,"date":"2024-03-30T23:16:58","date_gmt":"2024-03-30T23:16:58","guid":{"rendered":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/03\/30\/startups-looking-to-reverse-flip-must-pay-tax-piyush-goyal\/"},"modified":"2024-03-30T23:16:58","modified_gmt":"2024-03-30T23:16:58","slug":"startups-looking-to-reverse-flip-must-pay-tax-piyush-goyal","status":"publish","type":"post","link":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/03\/30\/startups-looking-to-reverse-flip-must-pay-tax-piyush-goyal\/","title":{"rendered":"Startups looking to reverse-flip must pay tax: Piyush Goyal"},"content":{"rendered":"
\"Startups<\/div>


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Laying out the government\u2019s stance on concerns flagged by Indian origin startups<\/a> over levy of hefty taxes for moving their domicile<\/a> back to India<\/a>, commerce and industry minister Piyush Goyal<\/a> said such entities will have to pay tax<\/a> for onshoring themselves.<\/p>\n

In an interaction with journalists from The Economic Times on Friday, Goyal said it would be difficult to justify a \u201cdiscrimination\u201d on which companies coming back to India should pay tax and which shouldn\u2019t.<\/p>\n

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\u201cThese companies went outside for their own selfishness\u2026not because of any pressure or other reason. They wanted to do better tax planning\u2026they enjoyed that benefit. Why they want to come back is not an altruistic motive. They want to list in India because here\u2019s where you get the valuations. India\u2019s growth story is unparalleled in the world and that\u2019s why they want to come here,\u201d he said.<\/p>\n

Also read | More startups India-bound, map \u2018reverse flip\u2019<\/a><\/p>\n

ET has reported earlier that several unicorn startups<\/a> including Pine Labs, Zepto, Meesho, Razorpay and Eruditus have been planning to move their headquarters back to India from jurisdictions such as Singapore and the US.<\/p>\n

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ETtech<\/span><\/figure>\n<\/div>\n

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\u201cSo, if they have to pay tax, it\u2019s good. It\u2019ll help us give more scholarships to poor children or build homes for the poor or replace the slums with proper housing. We have a lot of plans for this country and the tax they are paying is from their income on which they initially saved tax,\u201d the minister added.<\/p>\n

When these companies were being incorporated, access to necessary and timely domestic funding was difficult because of which many of these startups turned to overseas investors requiring them to establish their holding companies offshore.<\/p>\n

\u201cIn hindsight, this is becoming a big issue,\u201d said one founder.<\/p>\n

Also read | <\/strong>Domestic startups come under income tax glare for their recent funding<\/a><\/p>\n

Now, a number of these firms are looking to move their base back to India looking to benefit from the rising valuations being offered by domestic public markets to technology ventures.<\/p>\n

In January last year, US-based retail major Walmart paid nearly $1 billion in taxes<\/a> to the Indian government during separation of PhonePe from parent Flipkart and the return of the fintech company\u2019s holding entity to India.<\/p>\n

Shortly after that, the Economic Survey for 2022-23 laid down recommendations for the Union government<\/a> for tax simplification to accelerate the process of reverse-flipping, or shifting domicile from overseas locations back to India.<\/p>\n

During the interaction, Goyal underscored the need for higher investment from the private sector and domestic funds in the country\u2019s startup ecosystem. He said the Centre’s aspiration is to see 1,000 unicorns being born in India. “Our startup ecosystem is the third largest in the world and is working smoothly. I wish to see more private sector investments from domestic funds and industry. That’s my biggest concern about the startup ecosystem,” he said.<\/p>\n

Tax woes for startups<\/strong> <\/p>\n

Responding to a question on tax issues faced by startups related to Section 68 of the Income Tax Act, Goyal said: \u201cI have not been apprised of this specific issue. We can take it up with the finance ministry.\u201d <\/p>\n

On March 29, ET reported<\/a> that several startups, particularly those in the fintech space, have been slapped with income tax notices under Section 68 of the I-T Act. These notices club the venture investments raised by these startups with their incomes. Tax and penalties have then been levied on the combined amount, we reported. To be sure, this isn\u2019t the same as angel tax issues which startups have faced before.<\/p>\n

Goyal also spoke about the angel tax issue affecting startups that the norms around setting of valuations and the applicable tax were brought in considering \u201cfly by night companies\u201d set up and used for \u201chawala transactions or creating capital\u201d.<\/p>\n

\u201cThat was the reason that taxes were brought in\u2026and valuation norms have to be there. There is an indirect impact on startups\u2026so we must balance the two. If we totally open it up, then the startup issue will be resolved but the problem of the other sort will start again,\u201d he said.<\/p>\n

\u201cThe government has intelligently done that if you have such an issue, there is a DPIIT committee, you can come before that, register, and they’ll hear your case\u2026revenue officials are there (on the committee) and approve it. So, we have created that mechanism. It’s working,\u201d he added.<\/p>\n<\/div>\n

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Laying out the government\u2019s stance on concerns flagged by Indian origin startups over levy of hefty taxes for moving their domicile back to India, commerce and industry minister Piyush Goyal said such entities will have to pay tax for onshoring themselves. In an interaction with journalists from The Economic Times on Friday, Goyal said it […]<\/p>\n","protected":false},"author":2,"featured_media":14036,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"tdm_status":"","tdm_grid_status":"","fifu_image_url":"https:\/\/img.etimg.com\/photo\/msid-42031747\/et-logo.jpg","fifu_image_alt":"","footnotes":""},"categories":[607],"tags":[19618,19432,273,795,19431,18733,19619,922,301],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts\/14035"}],"collection":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/comments?post=14035"}],"version-history":[{"count":1,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts\/14035\/revisions"}],"predecessor-version":[{"id":14037,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts\/14035\/revisions\/14037"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/media\/14036"}],"wp:attachment":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/media?parent=14035"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/categories?post=14035"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/tags?post=14035"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}