Union Budget 2017; A kickstarter for startups

Posted on February 3, 2017 by ah! Ventures



Budget 2017 has a lot in store for startups making it easy for a lot of aspiring businessmen to enter the market. 

To begin with, the budget which focuses more on giving some noteworthy concessions to the startups while holding out on some of the major demands, has also focused keenly on the demands of investors. 

Somewhat conceding to the demands of the startups, the Finance Minister has increased the period of profit-linked deductions available to the startups to seven years from the current five years. However, the tax break is only available on the profits made by startups for three years. Also to keep in mind, it is only available to those startups which are recognised by the Department of Industrial Policy & Promotion (DIPP). 

The decision they say has been made in response to a series of presentations made by DIPP and the demand by various startups to extend the tax concession period. 

Although refusing to remove the Minimum Alternative Tax, as requested by the startups, Finance minister Arun Jaitley has allowed the companies to carry forward their MAT to 15 years (from the present period of ten years).

 The Finance minister also proposed to reduce the Income Tax for those companies with an annual turnover of upto Rs 50 crore to 25%. This gives the Micro, Small, medium Enterprises and thereby all startups a reduction of 5% (the current rate being 30%).

According to the Finance minister, the concessions will give a platform for MSMEs and startups to become more competitive and also provide many upcoming startups the drive to enter the market, thereby providing them with a more promising, profit-making and hassle free environment. 

However it will take a minimum of three months to witness the change in the startup trend, if any. Nevertheless it has given them a much needed breather to function smoothly.





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