Hyderabad: Many start-ups have been closing down in just one or two years due to the high commercial tax rate of 12.39 per cent.
Now entrepreneurs are asking the government to adopt the BJP’s promise of bringing in the Singapore system of commercial tax which provides complete tax exemption in the first year, and 50 per cent in the second year, which gives them space to establish themselves. On an average, some start-ups pay almost Rs 5 lakh a year as taxes, leaving no profit for themselves. Commercial tax is a state subject.
“We make only a marginal profit. But, many of our ideas do not survive due to heavy tax payments. In other countries new ideas are given a lot of funding,'said the founder of a firm that is now looking at compiling offers to make online shopping more fun.
But, we have become a country that outsources manpower. So, starting from the state government, there needs to be relaxation in taxes so that we can also become manufacturers," said the founder of a firm that is now looking at compiling discount coupons and offers, to make online shopping more fun.
Another creator of an app and software that customises parking spaces for IT parks and corporate spaces had to shut down because of its non-viability.
"We got good response for the app and many asked us to customise their parking space. But we fell short of funds and could not deliver the product. We made only a small profit of Rs 10,000 and the tax was almost the same amount," he said.
