Tax incentives for start-ups, sovereign wealth and pension funds extended until March 2025

In a bid to give the startup ecosystem some breathing space, the Center on Thursday announced extension of tax benefits for startups as well as investments by sovereign wealth and pension funds till March 2025.

Certain tax benefits for start-ups and investments in sovereign wealth or pension funds, as well as tax exemptions on certain income from certain International Financial Services Center (IFSC) units, will expire on March 31 this year.

“In order to maintain continuity, I propose to extend the date till March 31, 2025,” Finance Minister Nirmala Sitharaman said while presenting the interim budget on Thursday.

“As for the tax proposals, I do not recommend any changes in taxes in line with the Convention and recommend retaining the same rates of direct taxes and indirect taxes including import duties,” she added.

Anil Joshi, managing partner at Unicorn India Ventures, said extending the tax exemption to startups is a good gesture and providing Rs 100 crore to Sunrise Market at nominal or zero interest rates will definitely help Small business.

“No changes are expected in direct and indirect taxes, but we may see new rates in the full budget presented in July 2024,” he said.

Credgenics co-founder and CEO Rishabh Goel said that in order to sustain the growth momentum of existing startups, the government has extended the tax benefits for one year.

According to the Department for Promotion of Industry and Internal Trade (DPIIT), as many as 2,975 government-recognized start-ups have been granted income tax exemption so far.

The government provides income tax exemption under the Startup India programme.

In September last year, the government announced new angel tax rules, which included a mechanism for assessing shares issued by unlisted start-ups to investors.

Startups registered with DPIIT are not subject to the new norms. The government stressed that the exemption will benefit more than 80,000 start-ups.

(This article has not been edited by News18 staff and is published by IANS, the associated news agency)