Budget 2017-18. Start-ups can avail of 3-year tax holiday in a block of 7 years

Updated - January 12, 2018 at 09:14 PM.

The increase in window will give more time to reach a stage when they start earning profits before they exercise their option for income tax exemption.

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Eligible start-ups can now avail their three-year tax holiday in a block of seven years instead of five years giving them more time to take advantage of the benefit.

“The profit linked deduction available to the start-ups for 3 years out of 5 years is being changed to 3 years out of 7 years,” Finance Minister Arun Jaitley announced in his Budget speech on Wednesday.

For the purpose of carry forward of losses in respect of such start-ups, the condition of continuous holding of 51 per cent of voting rights has been relaxed subject to the condition that the holding of the original promoter/promoters continues, the FM said.

The other demands from start-ups, which included increasing the number of years of income tax exemption from three years to seven years and pushing back the qualification date before April 1 2016, have been ignored.

The increase in window for availing tax benefit will give more time to start-ups to reach a stage when they start earning profits before they exercise their option for income tax exemption.

Of the 1,425 applications received by the DIPP since the start-up policy was operationalised last year, 111 applications were considered for tax benefits as only these start-ups were incorporated after April1, 2016 and eight start-ups were approved for availing tax benefits

As many as 522 had the required documents and have been recognised as start-ups. These will be eligible for other benefits such as exemption from various compliances, help to file IPR applications and some relaxation in norms of government procurement reserved for small enterprises.

Published on February 1, 2017 09:51