Budget 2024: Tax Benefits To Start-Ups Extended For One More Year Till March 2025

Interim Budget: The government has taken various measures to promote start-ups in the country. As many as 1.17 lakh start-ups are recognised by the government so far

During the interim Budget presentation in the Lok Sabha, Finance Minister Nirmala Sitharaman on Thursday proposed to extend the tax incentive for start-ups and investments made by sovereign wealth or pension funds for one more year till March 2025. During her Budget speech, the minister said that certain tax benefits to start-ups and investments made by sovereign wealth or pension funds as also tax exemption on certain income of some IFSC (International Financial Services Centre) units are expiring on March 31, 2024.

"As for tax proposals, in keeping with the convention, I do not propose to make any changes relating to taxation and propose to retain the same tax rates for direct taxes and indirect taxes, including import duties. However, certain tax benefits to start-ups and investments made by sovereign wealth or pension funds as also tax exemption on certain income of some IFSC units are expiring on 31.03.2024. To provide continuity in taxation, I propose to extend the date to 31.03.2025," Sitharaman announced in the interim Budget.

The government has taken various measures to promote start-ups in the country. As many as 1.17 lakh start-ups are recognised by the government so far. These eligible start-ups can avail of tax incentives such as income tax benefits under an Action Plan for Startup India, the FM mentioned.

Gouri Puri, Partner at Shardul Amarchand Mangaldas & Co, said that as expected, the government has exercised policy restraint under the interim Budget with no tax proposals being announced. "The extension of the sunset dates for the tax holiday for startups, and tax benefits to sovereign wealth funds and aircraft leasing business in IFSCs are indeed welcome and offer tax certainty," Puri said.

Sarvjeet Virk, co-founder and MD at Finvasia, said, "The post-Budget landscape looks fairly positive, with a continued emphasis on initiatives like Startup India, Funds of India, and Startup credits. A corpus of Rs 1 lakh crore, coupled with interest-free loans for 50 years, is allocated for research and innovation. This initiative aims to offer long-term financing or refinancing with extended tenures and low to zero interest rates."

Deepa Seshadri, Partner at Deloitte India, said that with the unprecedented speed at which technologies are progressing, a well-defined legal framework is essential for encouraging responsible growth and building confidence.