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The Karnataka Start-up Booster Kit

The Government of Karnataka, through the Start-up Karnataka Booster Kit has introduced a plethora of incentives for start-ups. A start-up can now avail benefits vis-a-vis patenting an idea and can also seek support to market the idea. The government has also introduced tax incentives which we shall look at here

Service Tax Refund : For service providers


The service tax law provides tax benefits through its exemption notifications to different types of service providers. The law currently exempts incubatees located in a TBI or STEP, satisfying certain conditions from the whole of service tax for a period of 3 years.

The Start-up Karnataka Booster Kit now aims to extend a refund benefit to all service providers who satisfy the following conditions

  • The service provider should register with the Karnataka Start-up Cell and should obtain a registration number. The service provider should at least have a certificate under the Karnataka Shops and Commercial Establishment to apply.
  • The start-up should be incubated in a Government supported Incubator
  • The annual turnover of the start-up shall be less than or equal to Rs. 50 lakhs
  • Benefit shall be available for a maximum of 3 years


VAT / CST Refund : For manufacturers & traders

The Start-up Booster Kit also provides for refund of Value Added Tax on sale of goods. Though the Kit speaks of refund vis-a-vis Karnataka VAT and Central Sales Tax, the benefit would, as we shall see, apply primarily for KVAT.

The following conditions should be fulfilled to claim refund of KVAT

  • The applicant should register with the Karnataka Start-up Cell and should obtain a registration number. The service provider should at least have a certificate under the Karnataka Shops and Commercial Establishment to apply
  • Applicant should be an incubated start-up
  • Benefit is available only with respect to sales made for final consumption (i.e. B-to-C) within the state of Karnataka
  • The annual turnover of sale of goods (whether sales made within Karnataka or outside Karnataka)  should be less than or equal to Rs. 50 lakhs.
  • Benefit shall be available for a maximum of 3 years
  • VAT / CST on purchase of goods shall also be eligible for refund 

 

The applicant has to submit certain documents in support of the refund claim. The application shall be scrutinised by the Nodal Officer of the Karnataka Start-up Cell. The decision of the Managing Director, KBITS in this regard to sanctioning of any reimbursement under this incentive will be final  

Balakrishna Consulting LLP

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Bengaluru 560027

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pavan@balakrishnaconsulting.com
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