As the government has been taking various measures to promote startups in the country, Finance Minister Nirmala Sitharaman has proposed some tax incentives for startups and pension funds in the interim budget 2024-25.
The finance minister said in his budget speech that certain tax benefits for start-ups and investments in sovereign wealth or pension funds, as well as tax exemptions on certain income from certain IFSC (International Financial Services Center) units, will expire on March 31, 2024 . To ensure tax continuity, I recommend extending the date to March 31, 2025,” she said.
So far, 117,000 start-ups have been recognized by the government.
The Indian Startup Action Plan was announced on January 16, 2016. Among them, the government provides tax and non-fiscal incentives. The minister also said that the Indian economy is on a path of strong and sustainable growth.
What experts say
Rajesh Sivaswamy, senior partner at law firm King Stubb & Kasiva, said: “The tax benefits and incentives proposed by the government for startups are likely to have an impact on the growth and creativity of the Indian startup ecosystem. Make a positive impact, especially in the following areas: healthcare technology, online commerce, transportation and communications.”
He added that at a time when India remains one of the few bright spots, the exemption under Section 56 of the Income Tax Act for investments above fair market value by sovereign wealth funds and pension funds in startups will definitely be enhanced. Investor confidence in Indian market. Foreign direct investment in the world.
Bipin Preet Singh, founder and CEO of MobiKwik, said: “Extending tax incentives for start-ups, sovereign wealth and pension funds until March 2025 signals the government’s commitment to supporting growth and resilience. Long-term tax incentives demonstrate our unwavering commitment To create a conducive environment for start-up development and sustainable investment.”
Anshoo Sharma, CEO and co-founder of magicpin, hailed the move, saying it will provide much-needed continuity and capital inflow to the Indian startup ecosystem.
“We also appreciate the extension of tax benefits for sovereign wealth or pension funds investing in startups till March 31, 2025, which will provide much-needed continuity and capital inflows to the Indian startup ecosystem for another year and balance the global funding winter .India is a prominent outlier in the world,” Sharma said.
Sindhu Gangadharan, senior vice president and general manager, SAP India Labs and vice chairman of Nasscom, said extending the tax benefits for startups for another year is a progressive and encouraging move.
“… extending the tax exemption period for eligible start-ups, allowing newly established businesses to claim tax benefits for three years out of the first 10 years until March 2025, is a progressive and encouraging move. The government is Actively promoting the creation of a strong entrepreneurial ecosystem is critical to driving economic development.”
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