Tax Benefits Under Startup India Plan

The Startup India campaign has been one of the most remarkable developments which India has seen recently. The Union Government has ensured that blooming buds in the nation are given a chance to prove themselves and strengthen the Indian economy. With an allocated fund of INR 10000 crore, the initiative will allow thousands of Indians to show their skill in realm of innovation and research.

Given a consideration for the provisions of development, Startup India has been planned in such a manner that the interest of the entrepreneurs are preserved and the burden of taxes has been lifted on the start-ups for the initial years. Here are some of the tax benefits which are available:

1) Tax Exemption for the first 3 years

The pressure of tax on any startup can unsettle its long term plans. This is why Startup India has exempted from paying taxes in the first three years. The new business is free from the obligation of paying taxes and can continue with its developments. Issues such as financial bridging, diversified investments, etc., will no longer a problem for the entrepreneurs as tax burden has been lifted. Once the business completes its 4th year of operation, the same then needs to pay taxes are other operating businesses.

2) Capital Gain Tax Exemption

Another associated problem with startups is capital gain. Prior to Startup India, most of the startups failed miserably because of the range of taxes. Capital gains was one of the biggest problems and now it has been waived off under the Startup India campaign.  The new manufacturing concerns would now be freed from the concern for acquiring new assets for business. The initiative offers a chance for the new businesses to arrange the required resources to get the best output.

3) Exemption on investments made above Fair Market Value

New enterprises may also plan to acquire shares of another businesses with a view to make some dynamic investment channels. This is where the problem of making investments comes in. Additionally, the provisions of Income Tax also haunts the new investments. The new campaign has allowed businesses to avail a tax exemption on the amount which has been made above the fair market value. Investments made by venture capital funds are also exempted for the Startups.

To sum up, one can regard the Startup India campaign to be a boon for the budding entrepreneurs. The facility has not only opened up a new door for the new generation, but has also assured them with complete support from the Government. On an average, there are thousands of new startups every single day, but unfortunately there are only few who make it to the inception stage. Additionally, fear of failure also becomes a point of consideration. This is why the campaign also offers an option to make an early exist within 90 days from the start of the project. The future of India’s innovation, research and development looks promising with such positive developments.


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