New Delhi: Lauding start-ups in the country in the Union Budget for FY22-23, finance minister Nirmala Sitharaman on Tuesday said they have emerged as drivers of growth for our economy with a manifold increase in successful start-ups.
Applauding the announcements, Punit Gupta, Founder & CEO, EasyEcom, omnichannel solutions company for e-commerce businesses said, “The budget is promising for the start-up sector in terms of being called as drivers for the growth of the economy. Tax incentives for start-ups incorporated till March 31, 2023, are an encouraging step for potential as well as entrepreneurs to ensure an increase in cash flow. MSMEs getting a boost with interlinked portals, the blended capital fund will create a culture of ease of doing business in the country that will in future make India a preferable place for entrepreneurs.”
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While extending the tax incentive, the FM noted that eligible start-ups established before March 2022 had been provided a tax incentive for three consecutive years out of 10 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.”
“Time limit for incorporation for an eligible start-up for claiming income-tax holiday incentive has been extended by one more year to March 31, 2023, this is a welcome step for the start-up sector. Given the extension, the sector will see more eligible start-ups getting incorporated in the upcoming financial year. Further, capping of surcharge on long term capital gains on the sale of unlisted equity shares (from graded surcharge up to 37 per cent to 15 per cent) will reduce the effective long term capital gains tax rate from 28.49 percent to 23.92 per cent in the hands of investors, founders and founding team members,” said Gaurav Chadha, Business Tax Partner, EY India.
"The govt has recognised the startups as the growth driver and hence in view of a current pandemic the incorporation date is increased from 3 years to 4 years. We have seen a rapid growth of startups in India in the last 5 years. This incentive will benefit many new start-ups to sustain. We welcome this decision," said Zafar Imam, CEO, FinShell
Shreya Sabharwal, Founder and CEO, Squarefork, a startup in hospitality sector said, “Tax incentive for small businesses and startups increased by another year in the view of pandemic has given a sign of relief. Also, this tax incentive in way is a motivation for all the budding entrepreneurs out there.”
In an effort to establish a globally competitive business environment for certain domestic companies, a concessional tax regime of 15 per cent tax was introduced by the government for newly incorporated domestic manufacturing companies. “I propose to extend the last date for commencement of manufacturing or production under section 115BAB by one year i.e. from 31st March, 2023 to 31st March, 2024.”
“The financial minister's proposal to extend the period of eligible startups by one more year for providing tax incentives is going to be very beneficial for emerging startups. This will aid the economy further as a whole. Startup founders will also benefit from FM’s decision to cap surcharge on long term capital gains at 15 per cent, thus effectively encouraging angel investors with reduction in tax applicable to them,” said Navam Gupta, Co-founder at WedHaven.
“This year's budget is quite optimistic for the startup sector. The contribution of start-ups to economic growth has been recognised, and the tax incentive period for startups has been extended to four years from the date of incorporation, said Punit Sindhwani, CEO, Paxcom.
Overall, the startup sector has welcomed the initiatives in the Budget calling it an optimistic and futuristic budget.