Finance Minister Nirmala Sitharaman has extended by one more year the tax holiday for startups, providing a much-needed post-pandemic boost to the upstarts.
According to Union Budget 2021-22, startups will get capital gains exemption by one more year to 31 March 2022. Startups also have one more year to claim tax holida
“The existing provisions of Section 80-IAC of Companies Act, 2013, provide for a deduction of an amount equal to 100% of the profits and gains derived from an eligible business by an eligible startup for three consecutive assessment years out of 10 years at the option of the assessee subject to the condition that the total turnover of its business does not exceed Rs 100 crore for an eligible startup incorporated on or after the 1 April 2016 but before 1 April 2021.
“It is proposed to extend the period of incorporation of such eligible start-ups till 1 April 2022. This amendment will take effect from the 1st April, 2021,” according to the budget.
The government also proposed to incentivise incorporation of one-person companies, a move which will benefit startups and innovators. This move will allow such firms “to grow without restriction on paid-up capital and turnover, allowing conversion into any other type of company at any time, reducing residency limit for an Indian citizen to set up an OPC from 182 days to 120 days, and allow also non-resident Indians to incorporate OPCs in India,” Sitharaman said in her budget speech.
The paid-up capital of small firms has also been increased to Rs 2.50 crore from Rs 50 lakh.
Asof the last week of December, there were 41,061 govt-recognised startups in India. Of this, over 39,000 startups accounted for 4,70,000 jobs, according to the Economic Survey 2020-21. With as many as 38 unicorns, with 12 of them coming up last year, India’s startup ecosystem is currently the world’s third-largest.
Team- Intellex Strategic Consulting Pvt Ltd
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