The interim budget was released on 01/02/24.
Did it come with good news for the startup sector in India?
OurDesk takes a look.
1) Tax Holiday:
As per section 80-IAC, start-ups with a turnover of less than Rs.100 Cr in their previous FY (Financial Year) are eligible for a tax holiday of three years, any time in the first ten years of their incorporation.
Although this is great news, as per the Department of Promotion of Industry and Internal Trade (DPIIT) of the 1,17,000 registered startups that fall under the Startup India Scheme, only 1-2% (i.e. only 11,700-2,340) startups are eligible for this tax holiday.
2) Carry Forward Losses:
Start-up organizations are now able to carry forward the losses they incur during the said year to the next FY which can be set-off against their income. With VC funding drying up and startups trying to reign in costs, this measure can potentially help founders keep the lights on a little while longer.
3) Startup India Seed Fund Scheme:
This scheme provides financial assistance to startups for research and development, market entry and commercialization. It was implemented on the 1st of April in 2019.
The government allocated Rs 160 Cr in FY2024 and Rs 175 Cr in FY2025 under this scheme. The corpus (total amount) of the scheme being Rs 945 Cr. The increase in allocation for FY2025 can be seen as a vote of confidence in the sector and its primary players.
While these measures are only highlights of the interim budget, it is clear the startup sector in India is riding a wave. These decisions are taken in part to enhance the confidence of the business sector and indicate to the world that India is open for business. ‘Vocal for Local’ or ‘Make in India’ slogans aren’t just for advertisements, this government means business.
Source: Bare Income tax Act, Economic Times, The Hindu Businessline, Mint, Deccan Herald
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