Union Budget 2018- Meassures to promote start-ups

Section 80-IAC of the Act, inter alia, provides that deduction under this section shall be available to an eligible start-up for three consecutive assessment years out of seven years at the option of the assessee, if-

(i) it is incorporated on or after the 1st day of April, 2016 but before the 1st day of April, 2019;

(ii) the total turnover of its business does not exceed twenty-five crore rupees in any of the previous years beginning on or after the 1st day of April, 2016 and ending on the 31st day of March, 2021; and

(iii) it is engaged in the eligible business which involves innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property.

In order to improve the effectiveness of the scheme for promoting start ups in India, it is proposed to make following changes in the taxation regime for the start ups:—

(i) The benefit would also be available to start ups incorporated on or after the 1st day of April 2019 but before the 1st day of April, 2021;

(ii) The requirement of the turnover not exceeding Rs 25 Crore would apply to seven previous years commencing from the date of incorporation;

(iii) The definition of eligible business has been expanded to provide that the benefit would be available if it is engaged in innovation, development or improvement of products or processes or services, or a scalable business model with a high potential of employment generation or wealth creation.

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

Extract of Clause 26 of Finance Bill 2018

Clause 26 of the Bill seeks to amend section 80-IAC of the Income-tax Act relating to special provision in respect of specified business.

The said section, inter alia, provides that deduction under the said section shall be available to an eligible start-up, if it is incorporated on or after the 1st day of April, 2016 but before the 1st day of April, 2019; the total turnover of its business does not exceed twenty-five crore rupees in any of the previous years beginning on or after the 1st day of April, 2016 and ending on the 31st day of March, 2021; and it is engaged in the eligible business.

It is proposed to amend the said section so as to provide that deduction under the said section shall be available to an eligible start-up, if it is incorporated on or after the 1st day of April, 2016 but before the 1st day of April, 2021; the total turnover of its business does not exceed twenty-five crore rupees in any of the seven previous years beginning from the year in which it is incorporated.

It is also proposed to amend the definition of “eligible business” to mean a business carried out by an eligible start up engaged in innovation, development or improvement of products or processes or services or a scalable business model with a high potential of employment generation or wealth creation.

These amendments will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 201 8-2019 and subsequent years.

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Category : Income Tax (27930)
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Tags : Budget (1957) Budget 2018 (400) Income Tax Deductions (435) Startup India (98)

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