Startup India- Income Tax exemptions available for startup

Startup India- Income Tax exemptions available for startup

STARTUP INDIA crusade was propelled in India in 2016 to offer driving force to business and increment cooperation in the improvement of the nation. This crusade has empowered many growing business visionaries around the nation after all working for yourself is a thing anybody would request. The principle thought behind this imaginative advance taken up by the administration was to advance bank financing for new businesses, disentangle the procedure and award different accommodating tax exemptions for the beginners.

But to get the benefits of all the tax exemptions, it is mandatory for the start-ups to fall under the eligibility criteria for Start-up India.

Check if your Start-up plan is worthy for Startup India

  • Any organization that has been joined for less than 10 years will be considered as a startup.
  • Annual turnover of the organization in a money related year ought not to be in excess of 100 crore rupees.
  • It should be an absolutely new pursuit and not a current one attempting to reproduce itself or making another business after a split up.
  • The point of setting up the organization ought to be towards improvement, development or commercialization of new items and services driven by innovation or protected innovation.
  • The organization ought to be enlisted as a limited liability company, enrolled association or a private limited organization.
  • It must acquire affirmation from the Inter-Ministerial Board arrangement for such a reason.

If the following conditions are fulfilled then the Tax Exemptions are allowed for the eligible startups.

Tax Exemptions for Eligible Start-up

Enjoy ‘No–Tax’ for three years

The Startup fused after April 1, 2016, is qualified for getting 100% expense discount on benefit for a time of three years in a square of seven years given that yearly turnover doesn’t surpass Rs 25 crores in any budgetary year. This will assist the new companies by meeting their working capital prerequisites during their initial years.

Exemption from tax on Long-term capital gains:

Area 54 EE added to the Income-tax act expresses that the new businesses are exempt from long haul capital benefits, given that the capital additions are a piece of the reserve informed by the Central Government inside a time of a half year from the date of the exchange of the advantage. The greatest amount that can be contributed here is Rs. 50 lakhs and it must be contributed for a base time of 3 years. In the event that the speculator pulls back the amount before the completion of 3 years, the sum will be taxable.

Exemption on investments above the fair market value

For eligible start-ups, the government has exempted the tax being imposed on investments that are above the fair market value. These are the investments which are made by resident investors, family or funds that are not registered as venture capital funds. The investment made by incubators above reasonable market is additionally excluded.


Exemption to individual or HUF on long-term gains from equity shares

There is a provision in income tax act stated as section 54 B which defines that tax exemption will be given to any long term gains on the sale of the property, only if profit is reinvested into the enterprise. In any case, there has been a change in this arrangement which expresses that if an individual or a Hindu Undivided Family is happy to sell their property and reinvests the benefit to buy into at least 50 % or a greater amount of a current startup, at that point they are absolved from charge. This exception is accessible just if the offers are not exchanged or moved to anybody inside 5 years. If there should be an occurrence of the move of the bought resource, the tax will be applicable.

Sustaining losses

The carry forward of losses is only done for eligible start-ups brought about in the underlying 7 years, if all the shareholders of the company continue to hold their position during the losses incurred.

These exemptions will enhance the investment in eligible startups and boost their growth and expansion. There is a requirement for more individuals to join this crusade and put forward the open doors ahead. These assessment exclusions are an additional favorable position to inspire the spirit of all eligible start-ups making them ready for additional extensions and innovations.

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