Edited By: Mohammad Haris
Last Updated: January 04, 2023, 13:09 IST
The finance ministry on Wednesday said the income tax department has delivered on its Budget 2022 promise and extended the incorporation period of eligible start-ups by one year to March 31 this year. It makes startups eligible for tax incentives as per specified conditions.
An eligible startup incorporated before April 1, 2023, will be eligible for tax incentive for three consecutive years out of 10 years from incorporation.
“Income Tax Department boost for Start-ups! The period of incorporation of eligible start-ups extended by one year to 31st March, 2023 to make them eligible for tax incentives as per specified conditions.” according to an official tweet on Wednesday.
In a series of tweets last month also, the finance ministry had announced that the government has extended the period of incorporation of the eligible start-up till March 31, 2023.
These three consecutive years for which 100 per cent tax exemption can be availed need to be chosen by the start-up at its own discretion from any of the first 10 years. This deduction would be available to the eligible start-up if the total turnover of its business does not exceed Rs 100 crores in any of the years beginning from the year of its incorporation.
The Startup India campaign was initiated in 2016 by Prime Minister Narendra Modi to encourage entrepreneurship in India. The campaign introduced several bank financings processes for startups, also simplify the incorporation of the startup process and introduce various tax exemptions and other benefits to startups.
The ‘Eligible Startup’ can avail several tax benefits and exemptions.
Chirag Taneja, co-founder and CEO of Gokwik, said, “This (the extension of 1 year) is a welcome move by the government to strengthen and boost the startup sector in India that has been dealing with an unfavourable macro-economic environment since last year. This kind of tax rebate will help small startups to have the necessary working capital for sustainability and growth given how the funding situation in 2023 may not change drastically.”
Nitin Jain, co-founder of FightRight, said, “This is a great move by the government to support the Indian start-ups. The tax incentives will only accelerate job creation (already estimated at 45 million) and GDP contribution (estimated to be at 4-5 per cent in the next 3-5 years), by start-ups and will help India achieve it dream of becoming a $5 trillion economy by 2025-26. We expect additional measures by the Government in the upcoming budget to further boost the ecosystem and hope that the sunset date gets extended further into the future.”
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