Tax holiday for these businesses was extended by one more year to March 2022 during Budget presentations today. Capital gains exemption given to them has also been extended by one more year.
As of the last week of December, there were 41,061 govt-recognised startups in India. Of this, over 39,000 startups account for 4,70,000 jobs, according to Economic Survey 2021.
“In presenting the first e-budget, FM certainly has a tight rope to walk to help kick-start the economy. With an eye to future proof the country, the budget rightly has focussed on increased capital expenditure on health, education and infrastructure. Increased FDI limits to 74% for Insurance companies should help the insurance technology companies increase their footprint, furthering measures incentivising digital payments, along with measures enabling incorporation of OPCs will help spur individuals to further leap into the start-up space. Start-ups are an important catalysts to the nations growth and aspirations, and budgetary measures to help boost the space is a key enabler; however many anticipated key announcements for the segment haven’t fructified yet, hopefully this will be addressed in the near future,” said Ankur Pahwa, National Leader, e-commerce and consumer internet, EY India.
“We appreciate the government’s decision of introducing opportunities for startups in alleviating the challenges faced last year during the pandemic. An extension of the tax holiday for start-ups by one more year is a welcome relief for the startup space. Also, capital gains exemption till 31st march 2022 is another driving factor. These moves are strong signals towards building Atmanirbhar Bharat – supporting local businesses with no additional burdens for any industry players and with little to no change in direct taxes. However, we would’ve expected some more relief in tax slabs for middle class – the largest consumer base in India,” added Pankaj Vermani, CEO & Founder, Clovia.
“The budget was awaited with a lot of expectations and of that most have been met. Infrastructure & healthcare were the main spotlights of budget 2021 and a large investment has been allocated for the expansion of the road network. Also, just like it was predicted, Startups were given importance in this budget as well. The tax-exempt on the revenue, as well as investments, have been increased by one more year which will be beneficial for the startup growth in the country,” said Lokendra Ranawat, Founder & CEO, WoodenStreet.
There have been many steps taken by the government to help startups, which include broadening the definition of startups, simplifying regulations, providing income tax exemptions and setting up a Rs 10,000 crore Fund of Funds run by Sidbi, as per a report by the Economic Times.
The government has also recently approved the Startup India Seed Fund Scheme with a corpus of Rs 945 crore.
