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
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