"In order to encourage venture capital in the country, we are in favour of offerring tax benefits to boost innovative entrepreneurship," SEBI chairman D R Mehta said today.

"We will be meeting representatives of venture capital industry on December 28 and later submit our recommendations to the government," Mehta said addressing a seminar on capital markets organised by confederation of Indian industry here. Currently, two sets of guidelines for venture capital are in place and need to be harmonised, he said.

While SEBI deals with the issue of equity, Central Board of Direct Taxes (CBDT) deals with the tax related matters. Other issues including exempting venture capital companies from the three year dividend track-record for initial public offering (IPO) are also expected to be taken up bySEBI.

As per the existing guidelines, any company entering the primary market with a share issue needs to have a minimum dividend payment of preceding three-years. "Venture capital needs to be promoted faster and SEBI is aware of their needs," he said.