Finance ministry proposes to extend tax holiday for startups by another year

• These private companies were eligible for a 100% tax rebate on profit for a period of three years in the first ten years of their existence.
• “In view of the COVID pandemic, I propose to extend the period of incorporation of eligible startups by one more year up to 31/3/2023,” the finance minister said.
• Startups incorporated between April 1, 2016 till 31st March 2023 will be eligible for this scheme.

Finance Minister Nirmala Sitharaman has proposed to increase the tax incentives for startups by another year. The union minister, during the budget speech of 2022, highlighted that “startups have emerged as a driver of growth for our economy”.

“Eligible startups, established before 31/3/2022, had been provided a tax incentive for three consecutive years out of the 10 years from incorporation. In view of the COVID pandemic, I propose to extend the period of incorporation of eligible startups by one more year up to 31/3/2023,” Sitharaman said during her budget speech.

These private companies were eligible for a 100% tax rebate on profit for a period of three years in the first ten years of their existence. The government of India had extended the tax holiday for startups by one year during the budget of 2021 as well.

Startups incorporated between April 1, 2016 till 31st March 2023 will be eligible for this scheme.

According to the Department of Promotion of Industry and Internal trade (DPIIT), a company is recognised as a startup till 10 years after its incorporation. These companies should have a revenue threshold of ₹100 crore.

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