31 March 2024 — Commerce and Industry Minister Piyush Goyal emphasizes taxation for startups considering reverse-flipping to India, citing their past decisions as driven by selfish motives.
Key Points:
- Tax Liabilities for Reverse-Flipping: Goyal asserts that startups planning to shift base to India must be prepared to bear tax responsibilities, as their decision to leave was motivated by self-interest rather than altruism.
- Angel Tax Rationale: He defends the introduction of angel tax, highlighting its role in curbing value inflation and capital creation by unreliable entities.
- Startup Migration Trends: Many Indian startups, especially in fintech, e-commerce, stock broking, healthcare, and edtech sectors, have been contemplating relocating their base to India from abroad.
- Founder’s Perspective: Bhavish Aggarwal, founder of Ola Cabs and other ventures, advises against foreign domicile for Indian businesses, citing regrets among entrepreneurs who made such moves due to pressure from investors.
- Government Initiatives: The government has acknowledged the trend of startups domiciled abroad and formed a committee to explore ways to encourage onshoring of Indian innovation, particularly in financial services centers like the Gujarat International Finance Tec-City.
Conclusion:
Goyal’s stance on taxing startups opting for reverse-flipping underscores the government’s approach to incentivize domestic innovation and discourage overseas domiciliation driven by short-term financial considerations. Startup founders’ experiences also highlight the importance of aligning business decisions with long-term strategic goals rather than external pressures.
