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Government grant

JITENDRA SINGHVI (SELF EMPLYOED) (211 Points)

24 October 2019

whether government grant received by startup is taxable income..?

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Kapadia Pravin (17259 Points)
Replied 25 October 2019

On appeal before the Supreme Court by the Tax Officer, it was noted that the character of subsidy/Grant is to be determined based on the “purpose test”

It was clearly laid out that the object of the subsidy /Grant was for development of industrial growth in a particular sector and to generate more employment in the State.

So Government Grant received by startup is capital receipt and not taxable

Based on the purpose test of subsidy, it's a capital receipt and hence not Taxable.