Indian Union Budget 2021-22: India has maintained a continuous concentrate on the start off-up ecosystem in a manner that promotes start off-up entrepreneurs. Over the years, a variety of methods have been taken to make it less complicated for start off-ups in India. The present price range also addresses the require of this developing sector such as by extending the tax vacation below Section 80-IAC of the Income Tax Act, 1961 (‘I-T Act’) by yet another year such that start off-ups incorporated till March 31, 2022, are entitled to this exemption. Section 80-IAC of the I-T Act delivers for a deduction of one hundred % of the earnings and gains derived from the company by an eligible start off-up incorporated till March 31, 2022 (previously it was March 31, 2021) for 3 consecutive assessment years out of 10 years.
Further, the window for claiming exemption of capital gains tax arising from the transfer of residential house owned by eligible assessee exactly where such gains are invested into start off-ups has also been extended to March 31, 2022 (previously it was March 31, 2021). This extension will encourage domestic investments into start off-ups, thereby, creating it less complicated for start off-ups to raise capital.
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The Finance Minister Nirmala Sitharaman when presenting the Union Budget 2021 speech proposed to incentivise the incorporation of One Person Companies (‘OPCs’) by enabling OPCs to be incorporated with out any restrictions on paid-up capital and turnover. It also permitted the conversion of OPCs into any other kind of corporation at any time with out any restriction. It was also proposed that the residency limit for an Indian citizen shall be decreased for setting up OPCs from 182 days to 120 days and even nonresident Indians shall be permitted to incorporate OPCs in India. This amendment reduces the compliance burden and incentivises start off-ups to incorporate a corporation in India.
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Besides the above legislative proposals, the announcement as regards supporting the improvement of a globe-class Fin-Tech hub at the Present-IFSC will also permit start off-ups in the fintech ecosystem to get the needed infrastructure to additional fintech innovation. The allocation of INR 1500 crores for a proposed scheme that will provide economic incentive to market digital modes of payment and setting up the National Language Translation Mission, will add the gamut of possibilities that the start off-up ecosystem can participate in.
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While one was also expecting some relief on the provisions such as angel tax and clarification on the applicability of interest on deferring the payment of tax on perquisite when the employee workout routines stock alternatives to acquire shares, directionally, the amendments brought in the Union Budget 2021 is a welcome move that will market the development of startups in India.