New Delhi, Mar 30 (KNN) Addressing the concerns raised by Indian-origin startups regarding the imposition of substantial taxes upon relocating their headquarters back to India, Commerce and Industry Minister Piyush Goyal emphasised that such companies will indeed be subject to taxation upon onshoring.

Goyal explained that it would be difficult to justify discriminating between which companies coming back to India should pay tax and which should not, reported ET. 

He pointed out that these companies initially moved abroad for their own tax planning benefits, and now they want to return to India to take advantage of the country's growth story and high valuations, not for altruistic reasons.

As per earlier reports, several unicorn startups, including Pine Labs, Zepto, Meesho, Razorpay, and Eruditus, have been planning to move their headquarters back to India from jurisdictions like Singapore and the US.

The minister stated that if these companies have to pay tax upon returning, it's beneficial as the revenue can be used for initiatives like providing scholarships to underprivileged children, building homes for the poor, or replacing slums with proper housing.

He highlighted the irony of these companies initially benefiting from tax savings abroad, only to contribute taxes upon their return.

The minister acknowledged the challenges faced by startups in accessing domestic funding during their inception, which led many to seek investments from overseas, necessitating offshore holding structures. 

However, he recognised the evolving landscape where Indian startups are increasingly drawn back to their home country due to favorable valuations in the domestic market.

Last year, Walmart paid nearly USD 1 billion in taxes to the Indian government during the separation of PhonePe from Flipkart and the return of the fintech company's holding entity to India.

Regarding the angel tax issue affecting startups, Goyal acknowledged that valuation norms and applicable taxes were introduced to address concerns about ‘fly by night companies' used for illicit activities. 

However, the government has established a mechanism through a DPIIT committee to review and approve legitimate cases, balancing the interests of startups and preventing misuse.

(KNN Bureau)