Union Budget 2023: Income Tax Benefits for Start-ups to Continue for 10 Years [Read Finance Bill]

The finance Minister Nirmala Sitharaman on 2023 February 1, the budget speech introduced income tax benefit for start-up to continue for 10 years.

On the budget speech finance minister says that “India is now the third largest ecosystem for start-ups globally, and ranks second in innovation quality among middle-income countries. I propose to extend the date of incorporation for income tax benefits to start-ups from 31.03.23 to 31.3.24. I further propose to provide the benefit of carry forward of losses on change of shareholding of start-ups from seven years of incorporation to ten years”.

The 2022 budget the government allowed tax exemptions to start-up under section 80 IAC of Income Tax Act 1961

Section 80IAC of Income Tax Act 1961 mentions that for creating job and make entrepreneurs a start-up shall be allowed deduction of an amount equal to 100 percent of the profit and gains also the Start-up incorporated after April 1, 2016 is eligible for getting 100% tax rebate on profit for a period of three years.

From 2017 – 2018 certain exceptions are introduced,

• Under Section 80-IAC, the Start-up incorporated after April 1, 2016 is eligible for getting 100% tax rebate on profit for a period of three years. In any of the 7 consecutive assessment year. Also, it provide that the annual turnover must not exceed Rs. 25 crores in any financial year in which the deduction is claimed
• Further the startups have to pay Minimum Alternate Tax At 18.5% along with the applicable surcharge and cess.
• In case of Capital gain, Long term capital gain under section 54EE of Income Tax Act 1961 has been invested to the government fund. It may up to 50 lakh,but it must be invested within 6 months of transfer of assets, exemptions would be applied for 3 years

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