The Prime Minister of India, Shri Narendra Modi, announced some visionary goals to enhance the Startup ecosystem in the country. Promoting the Startup ideology, the PM brought up the Startup India initiative.
The initiative is proposed to fulfil the needs of struggling entrepreneurs and encourage them to work more effectively. Notedly, the Budget 2016 also had a different section for the tax benefits and exemptions for new startups. The Government aims to boost the economy with the help of technology and consumer-oriented startups.
The Government has also issued an action plan that lists around 19 points that could help the startups grow at a faster rate. The action points comply with the easy launch of the mobile app and website, self-certification, Startup India community, low-cost patent examination, proper funding support, fast exits, etc.
The Startup India action plan terms “Startup” as an individual entity that has to be registered with the Government of India, and the annual turnover should not exceed 100 crores in any financial year. It shall be working in the field of development and making products for the welfare of society with the help of innovation and technology.
Tax Exemptions for the Startups, Effective from 2017-18
Following, Tax exemptions for the startups have been introduced that will be effective from 2017-18. The proposed incentives and exemptions are:
- Under Section 80-IAC 2025 budget extends a Startup incorporated on or before April 1 2030, is eligible for getting Profits generated by eligible businesses for 3 consecutive years out of the first 10 years of incorporation are eligible for a 100% tax deduction. Also, the annual turnover must not exceed Rs. 100 crores in any financial year in which the deduction is claimed.
- The startups have to pay a Minimum Alternate Tax [MAT] at 15% along with the applicable surcharge and cess.
- Exemptions claim against capital gains. Long-term capital gains (LTCG) u/s 54EE will be invested in the Government’s special funds. The investment may go up to INR 50 Lakh and to be invested within 6 months from the date of transfer of assets, and the exemptions will be applied for three years
Recommended: GST Benefits for Startups in India
I have a query on submission of Startup declaration form -2. Can we file backdated form for approval. It is incorporated on and after 01st April 2016.
Due to online submission current date is reflected on submission of form.
I am a woman entrepreneur and my online business which was registered last year under GST. Is there any income tax exemption for me when I file my income tax.
Hello, I have a copyright for business process and project from GOI. I have been investing my time, energy and fund for gathering support for the project from GOI, states and related authorities for this I have to spend funds for travel, website, meetings, communication etc. So far I have not registered a company as I am not sure if Government will support the en-devour on its merits. The project is socio-economic benefit project and needs GOI intervention and approvals for implementation. I am unemployed for a year and I have to fund the support from my Fix Deposits earnings which is my lifeline.
Do I get any exemptions on filing my personal income tax returns?
For an eligible startup business, 100% exemption income derived will be provided for 3 consecutive years under section 80IAC.
We have just started a restaurant business and we have taken FSSAI certificate, will we eligible for startup exemption?