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Only 18% startups claim to have benefited from Startup India scheme


If you think the last couple of years were best for startups in the country. Then you may need to think again as a new survey by LocalCircles reveals the exact opposite thing about startups growth in India.

According to the report, the current situation does not look bright for startups and SMEs as Angel Tax continued to be a key pain point for them. Around 32 per cent of the startups received multiple income tax notices and about 38 per cent claim to have received income tax notices, which is just mere single per cent decrease from 2017, said the survey in possession of Entrackr.

Talking about govt scheme benefitting startups, the survey further added that only 18 per cent startups and SMEs claimed to have benefitted from the Startup India scheme. More than 80 per cent did not receive any benefit from the highly publicised scheme.


At present, the Income-tax department treats the capital raised by startups as income from other sources thereby levying 30 percent tax on them. There is a tug of war going on between govt and startups over their valuations.

Govt claims to curb money laundering through the move. They continue to raise a question on paying a high amount in investment when the real value is much less. Whereas startups think otherwise.

About 97 per cent of survey respondents think there is an urgent need for the income tax authorities to be educated on startup valuations.


In absence of required encouragement from the govt, startups founders have also been hit by recent development. Most of them see funding as the biggest hurdle.  Around 24 per cent of startups think of closing their business in 2019, which is 13 per cent rise from last year figure.

About 17 per cent of startups would be reducing their headcount whereas 25 per cent claim to hire more than 5 people this year.

The survey was conducted in over 35k startup community. LocalCircles claims to have got more than 40k responses from startups, SMEs and entrepreneurs across the country.

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