The National Board of Revenue (NBR) has introduced new guidelines for the registration and tax compliance of startup companies under the ‘Startup Sandbox’ initiative, aiming to ensure tax exemption and incentive benefits for eligible businesses.

Under the new rules, the NBR must issue a registration certificate within 60 days of receiving an application after completing the necessary verification. If no decision is made within the stipulated period, the application will be considered automatically approved.

The guidelines were issued in a directive signed by the NBR chairman on October 28.

According to the directive, startup companies seeking benefits under the Startup Sandbox must register with the NBR by submitting an application to the member (Tax Appeals and Exemptions) along with the required documents and information.

Applicants must provide their certificate of incorporation and memorandum of association issued by the Registrar of Joint Stock Companies and Firms (RJSC), along with a detailed description of their business activities.

Companies must also submit a consent letter allowing income tax authorities read-only access to their enterprise resource planning (ERP) systems, accounting software, core digital platforms or accounting ledgers.

The guidelines also specify circumstances under which the NBR may cancel a startup’s registration. These include providing false information or obstructing tax authorities from accessing the company’s digital systems.

Before cancelling a registration, the NBR must issue a show-cause notice, allowing the concerned company 60 days to respond. The company will also be given an opportunity for a hearing before a written cancellation order is issued.

The NBR may also revoke registration on other justified grounds, provided the startup is given a reasonable opportunity to present its case.