The government has extended the tax holiday for startups incorporated after April 2016 and before April 2021, Finance Minister Nirmala Sitharaman made the announcement while presenting the Union Budget for 2021 in parliament on Monday.
To qualify, the startups should have a turnover of less than Rs 100 crore.
The government has also committed to make the International Financial Services Centre (IFSC) in GIFT City a global financial hub. To benefit over 200K small firms, it’s also revising the definition under the Companies Act, 2013 for small companies by increasing their thresholds for paid-up capital from Rs 50 lakh to Rs 2 crore.
On the lines of the last fiscal year, startups will continue to get capital gains exemption until 31 March 2022. These exemptions are in line with the government’s focus on easing regulations.
Under the new budget, the government would incentivise the incorporation of One Person Companies or OPCs by allowing them to grow without any restrictions on paid-up capital and turnover. The revision would enable Non-Resident Indians or NRIs to incorporate OPCs in India and reduce the residency limit for an Indian citizen to set up an OPC from 182 days to 120 days.
“To ensure faster resolution of cases, NCLT framework will be strengthened, e-Courts system shall be implemented and alternate methods of debt resolution and special framework for MSMEs shall be introduced,” the budget document said.
In the upcoming fiscal (2021-22), the government will launch data analytics, artificial intelligence, machine learning-driven MCA21 Version 3.0. “This Version 3.0 will have additional modules for e-scrutiny, e-Adjudication, e-Consultation and Compliance Management”.
In addition to the tax incentives, the budget makes provision for capital gains for aircraft leasing companies and exemption for aircraft lease rentals paid to foreign lessors. Additionally, tax incentives will be offered for relocating foreign funds in the IFSC and allow tax exemption to the investment division of foreign banks located within the IFSC in GIFT City Gujarat.