Taxation benefits to a start up in india

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Ritik Chopra

student

7648 Points Posted on 05 May 2021

What are the taxation benefits to a start up in india?

Replies (3)

Quick Summary

Startups in India can benefit from significant tax advantages. These include a three-year income tax exemption upon certification by the Inter-Ministerial Board, exemption from Angel Tax up to INR 25 Crores, and a 100% tax deduction for three consecutive years out of ten under Section 80-IAC. Investors can also benefit from capital gains exemptions when investing in government-backed venture funds, making it easier for startups to attract capital. To qualify, startups must meet criteria such as incorporation date, business structure, annual turnover, and focus on innovation or scalable business models.

CA. Sourav Sarkar

Chartered Accountant

16188 Points Posted on 05 May 2021

Startups will be exempted from income tax for 3 years provided they get a certification from Inter-Ministerial Board (IMB).

People investing their capital gains in the venture funds setup by the government will get exemption from capital gains. This will help startups to attract more investors.

CA Niyati Soni

PROPRIETOR

741 Points Posted on 05 May 2021

Following are the benefit under Income Tax for Start up registered parties:

1) Angel Tax Exemption from sec 56(2)(viib) of Income Tax Act, 1961. - Exemption available up to an Investment of INR 25 Crores. (I.e. Aggregate amount of paid up share capital and share premium of the Eligible Startup after issue or proposed issue of share, if any, does not exceed INR 25 Crores)

2) Tax Deduction u/s 80-IAC-100% Tax deduction for any three consecutive years out of a period of Ten Years. Deduction Period is available at the option of Startup. The Eligible Start-up should be incorporated on or after 01.04.2016 but before 01.04.2021.

3) Only 80IAC recognized Startup can avail other tax benefits - Carry forward of Loss, Capital Gain Exemptions, ESOP Tax deferments.

SNDJCo

Managing Director

22 Points Posted on 06 May 2021

According to the Startup India Action Plan, the following conditions must be met to qualify as a startup

Ten years from the date of merger/registration has not yet been completed.
Registered as a private limited company or partnership or as a limited liability partnership.
Annual turnover is Rs. 100 crore for any financial year from merger/registration.
Working for the innovation, development, or improvement of products or processes or services, or whether it is a scalable business model with high potential for employment creation or wealth creation.
It is not formed by splitting or rebuilding an existing business.

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