Potential startups in India to get further impetus from extended relaxation in fiscal norms
The government has indeed laid stress on the socialistic governance right from its first Union Budget. In its long trail of incentives given to the masses, the government has added a string of relaxation in norms for the startups and budding entrepreneurs in its 5th Union Budget.
At first glance of this year’s budget, one can easily discern the socialist and humanitarian approach of the government, which is evident from the huge subventions it has conferred on the marginalized sections including poor farmers, daily wage earners, and SC/STs. Adding to all these, the government has availed a number of incentives and relaxations with respect to taxation and legal compliances to the potential entrepreneurs and startup aspirants.
While some of these relaxations are in abstract terms and are focused on changing of conceptions regarding the budding enterprises, others are in technical and fiscal dimensions.
Apart from the credit support facilities that have been sanctioned to the MSMEs, the government has rendered certain relaxations in taxation norms. The major respite has come in a way that the definition of a startup entity has been amended, wherein an origination will be considered as a startup till 7 years of its inception. Previously, the period of consideration was 5 years. The newly set up enterprises whose turnover doesn’t exceed â‚¹ 25 crores will now continue to avail the tax benefits till 7 years. Besides, the income tax sops are to be availed to such startups that are incorporated up to April 1, 2021, and have got a Tax Waiver Certificate.
Earlier this period of consideration was until April 1, 2019. Any entrepreneur undergoing the process of company formation must take these specifications into consideration for availing tax sops.
Additionally, the definition of an eligible startup business has been further extended as- “the one that is involved in the upgrading of products, processes or services” and “a scalable business model that has a high potential of employment generation and wealth creation”. In this respect, earlier only those entrepreneurs engaged in improvement, development or commercialization of ‘new’ products, processes or services assisted by latest technology or intellectual property rights were conferred eligibility to avail startup benefits.
Apart from that, finance minister Sh. Arun Jaitley has laid emphasis on strengthening the MSME sector, especially the fin-tech ventures. In this regard, he has made that the important measures towards institutional development crucial for creating the conducive atmosphere for the growth of fin-techs in India, will be shortly implemented.
As stated by Jaitley, the MSMEs account for 99% of corporate taxpayers in India. Considering this fact, the threshold limit for the turnover of the companies liable to pay 25% as corporate profit tax (CPT) has been drastically raised to â‚¹ 250 crore from earlier â‚¹ 50 crore.
Very significantly, the government has sanctioned a sum of â‚¹ 3,794 crore for Credit Support and Innovation of MSME sector.
As a manifest truth, all up-and-coming entrepreneurs need an MSME registration certificate to avail all these benefits.