The Union Budget that was presented by Mr. Arun Jaitley this year appears to have partially appeased entrepreneurs by providing relief in the form of taxes to start-up companies. The finance minister has stated that there would even be “amendments to the Companies Act to create an enabling environment for start-ups”. The budget reliefs follow a recent announcement by the Government on the definition of a start-up. (Please refer to our earlier post)
The following are the key takeaways for a start-up from this year’s Union Budget:
- A 100% deduction of profits for 3 consecutive years out of the 5 years of the existence of a start-up. However the minimum alternate tax will apply in such cases; and
- Provisions relating to capital gain on transfer of residential property not to be charged in the specified cases as provided under Section 54GB after March 31, 2019 for start-ups while simultaneously extending the meaning of new assets and an eligible company in order to provide for start-ups. The definition of new asset shall also include computers or computer software in case of technology driven start-ups certified by the Inter-Ministerial Board of Certification notified by the Central Government in the official gazette.