Government agencies will be able to access, authenticate or approve documents and data related to startup compliances through the blockchain framework
The framework will allow agencies instant access to documents for verification in tax processes and more
Earlier this year, the government was reported to be forming a panel to formulate a roadmap for regulations and use of blockchain in India
Looking to reduce the compliance burden on startups, the Indian government is reportedly in the process of building a blockchain-based validation framework that could simplify the submission of documents to various agencies.
At the moment, startups have to make separate submissions to regulators, intermediaries and authorities that increases not only the time related to compliance but also leads to duplication of efforts.
Central Board of Direct Taxes (CBDT), banks, public sector undertakings (PSUs), non-banking financial companies (NBFCs) and other regulators will be allowed to verify documents before providing financial or other assistance to startups through this single-window blockchain platform. These agencies will be able to access, authenticate or approve documents and data related to startup compliances through this framework.
According to an ET report, the Department for Promotion of Industry and Internal Trade (DPIIT) is currently working on building this system.
Each DPIIT-recognised startup will have four identifiers, a certificate number, name of the entity, incorporation number and blockchain ID. Using these, any official stakeholder can access documents or applications submitted by startups.
The platform can be utilised by government departments, PSUs, banks and investors to verify the authenticity of the information submitted by startups, as per an unnamed official quoted in the report. The official claimed this would enable quick turnaround in inter-departmental verification processes.
Under the system, different departments and bodies will be empowered to use the documents for their regulatory purposes. For instance, PSUs can check certificate authenticity, while the income tax department or CBDT can verify details before granting tax exemptions. Similarly, the government e-Marketplace (GeM) can validate startup certificates before onboarding them as vendors.
The blockchain-based system is expected to ease data sharing as all documents will be available in a decentralised ledger.
Reports from earlier this year suggested that the central government is likely to form a fresh panel to formulate a roadmap for regulations and use of blockchain in India. Regulations in blockchain could pave the way for official deployment of projects such as decentralised records and other governance applications.
For instance, earlier this year, the Election Commission of India said it is working with IIT-Madras for a blockchain-based app to enable electronic or digital voting in official elections. Similarly, in October last year, the Indian government launched a blockchain-based certification verification system, which will enable instant verification and access to certificates of recognition issued by the industry body.