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The government on Saturday proposed to extend the period of incorporation of eligible startups by five years for providing tax incentives, a move aimed at encouraging budding entrepreneurs.
Eligible startups established before April 1, 2030, would get a tax incentive for three consecutive years out of ten years from incorporation.
"We continue to support the Indian startup ecosystem. I propose to extend the period of incorporation by five years to allow the benefit available to startups which are incorporated before April 1, 2030," Finance Minister Nirmala Sitharaman in her Budget speech said.
The move would help in providing greater liquidity for startups.
Eligible start-ups can avail complete deduction of profit and gains for three consecutive years out of 10 years, beginning from the year of incorporation.
The benefits under Section 80-IAC of the income tax law will help such enterprises improve their liquidity, cash availability, and work capital, boosting growth and productivity, according to the Department for Promotion of Industry and Internal Trade (DPIIT).
It would also provide regulatory policy certainty and allow them to develop long-term plan for growth and scale-up.
