Centre extends tax break for homegrown startups till March 31, 2024
By Team Startupcity | Wednesday, 01 February 2023, 15:01 IST
The tax holiday programme for startups has been extended by the Centre until March 31, 2024, meaning that businesses who incorporate no later than that date would be eligible for tax benefits. Up to March 31, 2023, startups that have already been incorporated could still use the tax holiday programme.
"We suggest moving up the date of incorporation for startups eligible for income tax incentives from 31.3.2023 to 31.3.2024. I also suggest extending the benefit of carrying forward losses incurred by startups when changing their shareholding from seven to ten years after incorporation "said Nirmala Sitharaman, minister of finance.
For the first time, the government declared in the 2017 Union Budget that startups founded after March 31, 2016, might benefit from a tax holiday for three of the following seven years, provided that their annual turnover does not exceed Rs 25 crore in any one financial year.
The extension of the tax benefit deadline is a move in the right direction for the startup ecosystem, according to Anuj Parekh, CEO and Co-Founder of Healthysure. Additionally, Sitharaman increased the window for startups to carry forward losses from changes in shareholding from the current seven years to ten. It is tough for innovative and tech businesses to be profitable right away, especially if they are serving India's billion Internet users, the expert said. "The change to set off losses for 10 years is another benefit," he added.
According to Prakhar Pandey, the founder and CEO of Moolaah, these measures will encourage entrepreneurship throughout the nation, creating more jobs. A handful of these approaches "may allow domestic and global investors to take a larger bet on good quality businesses," the author continued. "With India's current startup ecosystem and a dry-up in funding across stages of growth."
More than nine lakh direct jobs have been created by startups recognised by the Department for Promotion of Industry and Internal Trade (DPIIT), according to the Economic Survey for 2022–2023 published this week, with a noteworthy 64–% rise in 2022. According to the survey, there will be 84,012 recognised startups in the nation in 2022, up from 452 in 2016.
According to the Economic Survey, "Roughly 48% of our startups are from Tier II and III cities, a tribute to our grassroots' immense potential." According to Subodh Garg, CFO of Cashify, significant initiatives have been done by the government to make India a startup hotspot since the introduction of the Startup India initiative in 2016.
Another move that will aid in fostering the growth of the startup business and promoting innovation in the nation, according to Garg, is the lengthening of the period of carry forward of losses on change of shareholding of startups from seven years of incorporation to ten years.
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