Skip to main content

Start ups Likely to Get Tax Benefits in Union Budget

By
DIPP proposes tax concessions on ESOPs, unlisted securities and convertible instruments
Prime Minister Narendra Modi's key Startup India programme may get a boost in the upcoming budget with the industry department drawing up a list of tax concessions on employee stock options, unlisted securities and convertible instruments. The union budget is expected to be announced on February 1.
The push comes amid concerns that the startup movement in India was losing steam and there hasn't been a significant improvement in ease of doing business. The Department of Industrial Policy and Promotion (DIPP) has proposed that ESOPs for startups be taxed at the time of sale, when they have greater liquidity to pay taxes and the instruments get a fair valuation.
DIPP has also said that the period of long-term capital gains for unlisted securities be reduced from the current limit of 24 months, keeping in mind that investing in startups is risky and subject to a higher rate of tax. “We are trying to address various tax and regulatory issues which the startups are facing currently, hoping that the budget will address some of these issues,“ a senior government official said, requesting anonymity.
Industry agrees with the need for incentives.
“Startups mo ve away from In dia because of the current tax regime. Some of these changes are simply hygi ene factors and not concessions to help startups stay and floua,“ said Sharad rish in India,“ said Sharad Sharma, cofounder of think tank iSPIRIT.
The long-pending demand of increasing the tax holiday period for startups to seven years from three years has also been forwarded to the finance ministry by DIPP.
The tax holiday was announced to help startups meet cash constraints and limited avenues of finances available in their early days. DIPP is also in the process of finalising guidelines for a credit guarantee fund scheme to increase the availability of finance for startups.
The Startup Action Plan announced by Prime Minister Modi in January 2016 said a credit guarantee mechanism through the National Credit Guarantee Trust Company or the Small Industries Development Bank of India (Sidbi) would get funding of Rs.500 crore annually for the next four years.
The government had announced several incentives for startups at the launch of the Startup India Action Plan such as a three-year income tax holiday subject to non-distribution of dividends and capital gains tax exemption for investments in newly formed manufacturing micro, small and medium enterprises by individuals. Only companies registered after April 2016 can apply for the tax benefits. DIPP also announced a tatkal service for startups for filing patents.
Under the faster clearance route, application fees for individuals and startups have been kept at Rs.8,000 while for companies, it could be as much as Rs.60,000
The Economic Times New Delhi,02th January 2016

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

By
  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...
Post a Comment
Read more