Extending the period for claiming deduction by start-ups

The existing provisions of section 80-IAC, inter alia, provide that an eligible Start-up shall be allowed a deduction of an amount equal to one hundred per cent of the profits and gains derived from eligible business for three consecutive assessment years out of five years beginning from the year in which such eligible start-up is incorporated.

In view the fact that start-ups may take time to derive profit out of their business, it is proposed to provide that deduction under section 80-IAC can be claimed by an eligible start-up for any three consecutive assessment years out of seven years beginning from the year in which such eligible start-up is incorporated.

This amendment will take effect from 1st April, 2018 and will accordingly, apply in relation to assessment year 2018-19 and subsequent years.

[Clause 36]

Extract of relevant clause from Finance Bill, 2017

Amendment of section 80-IAC.

36. In section 80-IAC of the Income-tax Act [as inserted by section 42 of the Finance Act, 2016], in sub-section (2), for the words “five years”, the words “seven years” shall be substituted with effect from the 1st day of April, 2018.

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Category : Income Tax (24782)
Type : Articles (13666)
Tags : Budget (1472) Budget 2017 (351) Income Tax Deductions (418) Startup India (77)

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