According to Commerce and Industry Minister Piyush Goyal, measures included in the Budget, such as extending the term of incorporation for qualified aspiring entrepreneurs for the purpose of giving tax advantages, would significantly help to boost the nation’s startup ecosystem.
In order to provide tax advantages to support aspiring entrepreneurs, the government on Wednesday proposed to prolong the period of incorporation for qualified businesses by an additional year, until March 31, 2024.
Nirmala Sitharaman, the Minister of Finance, has also suggested easing regulations for new businesses by extending the ability to carry losses forward for ten years.
According to Goyal, from the inception of the Startup India initiative, the government has continually supported the startup ecosystem, and the startup scene in the nation has grown significantly.
Accordingly, the minister told PTI, “My impression is that this (Budget) would undoubtedly give a lot of support and encouragement to the startup ecosystem so that it grows in the years to come.”
He said that the budget also put a lot of emphasis on encouraging new businesses in the agricultural industry, creating “agri-preneurs,” and giving them encouragement to develop better concepts for cold storage facilities, food processing, and value addition in the agricultural sector.
In her address on the budget, Sitharaman said, “I suggest moving up the date of incorporation for companies in order to qualify for income tax benefits from March 31, 2023, to March 31, 2024. I also suggest extending the benefit of carrying forward losses from startups’ change in shareholding from seven to 10 years after incorporation.”
The Finance Minister said that the government will establish an Agriculture Accelerator Fund to support agri-startups by young entrepreneurs in rural areas (AAF).
In order to facilitate inclusive, farmer-centric solutions, a digital public infrastructure for agriculture will also be established.
The government extended this till March 31 of the current year in the budget from the previous year.
For three consecutive years out of the first ten years following incorporation, tax incentives have been offered to eligible businesses founded before March 31, 2023.
Startups that were incorporated on or after April 1, 2016, may seek an exemption from paying income taxes. For three consecutive years out of the first ten years following incorporation, recognised startups that receive an inter-ministerial board certificate are free from paying income tax. In order to encourage startups in the nation, the government has taken a number of actions.
The Fund of Funds for Startups (FFS) scheme, Startup India Seed Fund Scheme (SISFS), and Credit Guarantee Scheme for Startups (CGSS) are implemented as part of the Startup India programme to offer funding at different stages of a startup’s business cycle.
In order to foster innovation and encourage private investment in the startup ecosystem, the government introduced the Startup India initiative in January 2016. The programme aims to ignite India’s startup culture and create a robust and inclusive environment for entrepreneurship and innovation.
The Department for Promotion of Industry and Internal Trade (DPIIT) has more than 84,000 startups registered through November 2022. These firms are eligible for various tax breaks, including the income tax reductions made public under the Startup India initiative.
According to Deloitte India Partner Jatin Kanabar, the Budget includes provisions for encouraging the MSME and startup sectors. “Proposals for increased credit guarantees, an extension of the incorporation date for the tax holiday, relaxation of the carry forward of losses, the enhanced limit for presumptive tax regime, and deduction linked to payments for encouraging timely recovery by MSMEs are all welcome provisions.”, he said.