Startup India campaign is a program launched by the Indian
government to boost entrepreneurship in India. The action plan is aimed at
promoting bank financing for startups, simplifying the incorporation of the startup
process and grant of various tax exemptions and other benefits to
startups.
According to the
latest Business News, the following tax
exemptions have been allowed to eligible startups:
1.
Exemption from tax on long term capital gains: The startups will be exempted
from the tax on a long-term capital gain if the long-term capital gain or a
part thereof is invested in a fund notified by the Central Government within a
period of six months from the date of transfer of the asset.
2.
Tax exemption on investments above the fair market value: The government has exempted
the tax being levied on investments above the fair market value in eligible
startups.
3.
3 year tax holiday in a block of seven years: The startup is eligible for
getting 100% tax rebate on profit for a period of three years in a block of
seven years provided that annual turnover does not exceed Rs 25 crores in any
financial year.
As per the Government Startup Action plan, the followings conditions must be fulfilled
in order to be eligible as a Startup:
1. The startup should be registered in India for less
than seven years and for technology startups up to 10 years from its date
of incorporation.
2. The annual turnover must not exceed Rs 25
crores in any of the preceding financial years.
3. The startups should be directed towards
development, deployment, innovation or commercialization of new products,
processes or services driven by technology or intellectual property.
4. The business must not be formed by splitting up
or reconstruction of a business already in existence.
5. The startup must obtain certification from the
Inter-Ministerial Board setup.
6. It can be incorporated as a private limited
company, registered partnership firm or a limited liability partnership.
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