Karnataka’s new policy for startups to reimburse service tax paid by them

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Information technology firms are happy that Karnataka, under its startup policy, reimburses service tax paid by emerging companies.

Information technology firms who paid service tax last year but has been trying to figure how to get it reimbursed from the government. Many startup entrepreneurs are looking for clarifications to policy-related questions or assistance to overcome implementation hurdles, which a new state initiative should help resolve.

Karnataka’s new information technology minister, Priyank Kharge, is giving the finishing touches to a programme that promises to address various problems that startups encounter, including ones such as the one before Shantharam.

Kharge is expected to announce the finer details of the programme in a couple of days. Startup entrepreneurs face a host of problems and the state government intends to address these through its proposed Startup Booster Kits, Kharge, told ET.

“They may find licensed software or data storage or internet expensive. They may be facing a lack of legal and accounting assistance. They may not know if their idea is good enough or can become a proof of concept. We will help them,” the minister said.

He plans an integrated startup cell, and the booster kits, he said, will prove to be a game-changer for entrepreneurs as these aim to address their entire needs. “We will give all kinds of help, including legal, accounting and mentoring. If you have an idea and want to develop it as a proof of concept, one can do that in our incubation centres. I have about 300 extra seats lying vacant, which I can share with about100 startups,” the IT minister said.

The IT department will also throw open its doors to connect startup entrepreneurs with venture capitalists and government funds available Kharfor various sectors. There are several benefits that several startups are probably not aware of, and all that a startup will need to do is register with the cell.

The department also plans to make the back-end processing for dealing with startups sector-specific. For example, there are specific funds available for women entrepreneurs, SC/STs, and the aerospace, pure sciences and agriculture sectors.

Kharge said he is also talking to all departments to groom startups where possible.

The Karnataka information technology and biotechnology department, meanwhile, is also tying up with various dealers who are willing to provide their products and services to registered startups at a concession.