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Mridusmita Deka|May 28, 2023
NEW DELHI: Measures announced in the Budget such as extending the period of incorporation of eligible budding entrepreneurs for providing tax incentives, would provide a lot of support to further strengthen the country's startup ecosystem, Commerce and Industry Minister Piyush Goyal has said.
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 has also proposed to ease norms for startups by extending the benefit of carrying forward losses to 10 years.
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Goyal said that the government has consistently been supporting the startup ecosystem and since the launch of the startup India initiative, the country has had significant growth in the startup arena. "So my sense is that this (Budget) will certainly give a lot of support and help to the startup ecosystem so that it flourishes in the years to come," the minister told PTI.
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He said that the Budget also focused on promoting startups in the agriculture sector and making 'agri-preneurs' and giving them a boost to come up with better ideas for cold storages, food processing, and value addition in the agri sector. Sitharaman in her Budget speech said: "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".
To encourage agri-startups by young entrepreneurs in rural areas, the finance minister stated that the government will set up an Agriculture Accelerator Fund (AAF). A digital public infrastructure for agriculture will also be built to enable inclusive, farmer-centric solutions. In the last year's budget, the government extended this till March 31 this year.
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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.
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More strength to Startups!— Piyush Goyal (@PiyushGoyal) February 1, 2023
Income tax benefit for startups extended for one more year till FY 23-24.
Time limit for carry forward of losses on change in shareholding of startups increased from 7 years to 10 years.#AmritKaalBudget pic.twitter.com/CJjdII7zYf
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.
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