Startups Request FM for GST Refunds & Liquidity Support

The startups in India have written a letter to the office of the Finance Minister of India, Mrs. Nirmamla Sitharaman, asking for liquidity support because of the lockdown announced by the government after the outbreak of COVID-19. The letter stated that more than half of the startups will go bankrupt because of the lockdown if no financial aid is provided by the government. They have also asked the government to refund the due amount of Income Tax and GST liable to them and asked that the government should ask the banks to provide working capital loans to them easily.

The letter presented was signed by the owners of more than 80 startups in India Get to know most opportunistic points to be considered by startups for their benefit. We combined points as simplified taxation system, practical challenges. Read More which included Kris Gopalakrishnan, Rajan Anandan, TNM Mohandas Pai among others. TNM Mohandas Pai, the former chief financial officer of Infosys said, ‘The startups essentially need some support so that they can keep going for the next 2-3 months because many of the small companies are in trouble.’

Mr. Pai also said that they have requested the government to provide funds to Small Industries Development Bank of India (SIDBI) under ‘Fund of Funds’ as this fund was not provided by the bank to the people who were interested in making some investment in the startups, the venture capitalists (VCs). The fund that was supposed to be given to the startups was needed by the startups to run their course. He said that they have also asked the government to provide additional funds to the VCs apart from those under ‘Fund of Funds’.

An online community, comprising more than 35,000 startups in small and medium enterprises (MSMEs) View the impact of GST law on startups and SMEs (small and medium enterprises) in India. The tax will provide great relief to these companies (experts reveal). Read More, named LocalCircles has also written to the office of FM saying that the outbreak of COVID-19 has been causing tremendous problems for the startups and MSMEs. The letter read that the demand for the products was decreased because of the outbreak of the virus around the globe but the lockdown has made the situation even worse. Now, the startups are unable to perform even at the lowest levels.

The letter written by the Chairman of LocalCircles, Mr. Sachin Taparia said, “Large corporates are exercising force majeure clauses with startups and SMEs at an accelerating pace, not making payments due to lockdown and several other reasons, and almost all venture funding drying up, the situation is fast deteriorating. Add to it, the mandatory payment of salaries to workers for the period of lockdown as issued by many states or local administrations is only making things worse where many founders are at the point of calling it quits.”

Read Also: New GST Registration for Startup Companies in India Get to know the complete GST registration procedure online on the Indian government GST portal official website. We have explained by the actual screenshot of every step. Read More

For the purpose of converting potential customers into actual customers and to increase the demand and sales of the startups under LocalCircles, the community held some surveys. The surveys were conducted within the community to get ideas from the startups about what can be done by the government to ease up the problems faced by the community and other small businesses. More than 30,000 responses were recorded in the survey out of which some of the demands and recommendations are detailed under:

• The startups under the Department for Promotion of Industry and Internal Trade (DPIIT) want the government to reimburse the remuneration of at least half of the employees working in such startups.
• The community also suggested that the government can issue a grant of Rs 20 lakh for the employees under DPIIT if they are unable to reimburse the salaries.
• More than 65% of the startups under LocalCircles suggested that the government should provide some or the whole amount of Corporate social responsibility (CSR) funds to them as a grant.
• More than 82% of the startups under LocalCircles want the government to provide the refund of Tax Deducted at Source (TDS) liable under the financial year 2019-20 within 15 days to the startups to provide financial help to them.
• More than 50% of the startups want the government to make it mandatory for various government departments and other Public Sector Undertakings (PSUs) to pay their pending dues to such startups.
• More than 50% of the startups want the government to make it mandatory for various corporate entities to pay the dues of such startups which are due from more than 45 days.

The letter also read that the community of LocalCircles thinks that hopefully, the demands made by the startups are very important to be considered and will be listened to by the government and some action will be taken by them soon in this regard.