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Taxation benefits to a start up in india

Ritik Chopra (student) (8123 Points)

05 May 2021

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

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CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 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 ) (651 Points)
Replied 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 ) (24 Points)
Replied 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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