India: Budget 2017 provides startups with tax holiday for first seven years of existence

To avail the concession, startups have to present their application to the DIPP, which will then be reviewed by a three-member inter-ministerial panel. Photo: Priyanka Parashar/Mint

Finance minister Arun Jaitley on Wednesday altered the policy on tax concessions for start-ups and said firms incorporated after 31 March 2016 could now avail of a three-year tax holiday in the first seven years of their existence.

The rebate could earlier be availed in the first five years.

In his budget address, Jaitley said, “The profit-linked deduction available to start-ups for three years out of five years is now being changed to three years out of seven years.”

Further, for medium and small enterprises with an annual turnover of up to Rs50 crore, the budget announced a five percentage point rebate on corporate tax to 25% from the earlier 30%.

The moves come in response to a series of presentations made by the Department of Industrial Policy and Promotion (DIPP), industry bodies like the National Association of Software and Services Companies, think tanks and start-ups to extend the tax concession period.

The change is, however, likely to provide only minor relief to start-ups. Stakeholders had requested either removal of the incorporation date criterion or increase in the concession period. Most start-ups are not able to achieve profitability in the first few years of existence.

To avail the concession, start-ups (that meet the government’s definition of a start-up) have to present their application to the DIPP, which will then be reviewed by a three-member inter-ministerial panel comprising a joint secretary from DIPP and representatives from the Department of Biotechnology and Department of Science and Technology.

The panel meets once a month to decide on applications based on how innovative a start-up is.

Only eight startups were allowed to avail the tax rebate in 2016 out of 111 applications received, according to data on the Startup India website.

Also Read: Start-Up India: Enough fuel to go the distance?

Do Indian start-ups need protection from foreign competition?

This article was first published on Livemint.com

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.