In a bid to boost the startup ecosystem of the country, the government has extended the period of the existing tax benefits for startups by one year.
“Startups have emerged as a growth driver for the economy. Tax incentives for startups increased from three years to four years of incorporation, in view of the pandemic,” Finance Minister Nirmala Sitharamn said while announcing the Union Budget 2022.
“Eligible start-ups established before 31.3.2022 had been provided a tax incentive for three consecutive years out of ten years from incorporation. In view of the Covid pandemic, I propose to extend the period of incorporation of the eligible start-up by one more year, that is, up to 31.03.2023 for providing such tax incentive,” she added.
Likewise, a 15% tax has been decided for the newly incorporated manufacturing unit. The period of incorporation has been increased by one more year to 31-3-2024. This will further boost manufacturing activities.. The minister also proposed to extend the capital gains exemption for investment in start-ups by one more year till March 31, 2023.
The Finance Minister also announced reduction of surcharge on unlisted shares from 28.5 per cent to 23 per cent. The move will likely facilitate investor exits and investment churn. The Union Budget 2022 proposed to review the regulatory framework for venture capital with an expert committee to be set up.
Sitharaman said that start-ups will be promoted to facilitate ‘Drone Shakti’ through varied applications. “In select ITIs, in all states, the required courses for skilling, will be started.”
She declared the National Bank for Agriculture and Rural Development (NABARD) would provide a fund with blended capital to fund startups working in the agricultural field and rural enterprises relevant for the farm produce value chain.