The Union Budget 2021 grants relief to the Start-ups by extending tax holiday by one year. To boost funding of the start-ups, the capital gains exemption for investment has also been extend by one year. As a part of the Start Up campaign proclaimed by Prime Minister Narendra Modi in 2016, all start-ups formed after 1st April 2016 is entitled to get 100% tax rebate on profit for a period of three years in a block of seven years provided the annual turnover does not exceed Rs. 25 crores in any financial year.
The proposed Budget generously extends the Tax holiday to 31st March 2022. The start-ups in India were striving to survive due to the COVID-19 pandemic. This incentive comes as a relief to 41,061 government recognised start-ups. With this new proposal the government aims to incentivise setting-up of more start-ups in the country.
There are 38 start-ups recognised as unicorns and the start-up environment in India is currently ranked third in the world. Many steps are being taken by the government to aid the start-ups. There has been broadening of definition and simplifying stringent regulations. Furthermore, a 10000 crore funds of funds were also set up and run by SIDBI. Another scheme to help the start-ups recently approved by the government is the Start-up India Seed Fund Scheme. It has a corpus of Rs.945 crore and aims at extending financial assistance to start-up for proof of concept, prototype development, product trials, market entry and commercialization.
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