Startups incorporated till Mar 2024 to get income tax benefits: FM
NEW DELHI: The government on Wednesday proposed to extend the period of incorporation of eligible startups by one more year till March 31, 2024, for providing tax incentives to encourage budding entrepreneurs.
Finance Minister Nirmala Sitharaman also proposed to ease norms for startups by extending the benefit of carrying forward losses to 10 years.
“I propose to extend the date of incorporation for income tax benefits to startups from March 31, 2023, to March 31, 2024. I further propose to provide the benefit of carry forward of losses on change of shareholding of startups from seven years of incorporation to ten years,” she announced.
In the last year’s budget, the government extended this till March 31 this year.
Eligible startups established before March 31, 2023, have been provided with a tax incentive for three consecutive years out of ten years from incorporation.
Startups incorporated on or after April 1, 2016, can apply for income tax exemption.
The recognised startups that are granted an inter-ministerial board certificate are exempted from income tax for three consecutive years out of 10 years since incorporation.
The government has taken a series of steps to promote startups in the country.
Under the Startup India initiative, the Fund of Funds for Startups (FFS) scheme, Startup India Seed Fund Scheme (SISFS) and Credit Guarantee Scheme for Startups (CGSS) are implemented to provide capital at various stages of the business cycle of a startup.
The government launched the Startup India initiative in January 2016 with the intent to build a strong ecosystem for nurturing innovation and encouraging private investments in the startup ecosystem.
The initiative is intended to catalyse startup culture and build a strong and inclusive ecosystem for innovation and entrepreneurship in India.
Over 84,000 startups are registered with the Department for Promotion of Industry and Internal Trade (DPIIT) till November 2022. These startups can avail of certain tax incentives, including income tax announced under the Startup India initiative.
Jatin Kanabar, Partner, Deloitte India, said the Budget has provided for incentivising startups and the MSME sector.
“Proposals for increased credit guarantee, an extension of date of incorporation for the tax holiday, relaxation of carry forward of losses, the enhanced limit for presumptive tax regime and deduction linked to payments for encouraging timely recovery by MSMEs are all welcome provisions,” he said.
KR Sekar, Partner, Deloitte India, too said that the startups have been clamouring for easy compliance and the benefit of an extended period of carry forward of losses. (PTI)