BENGALURU: Finance Minister Nirmala Sitharaman has extended the date of incorporation for income tax benefit for startups from March 31, 2023 to March 31, 2024. This should serve as a welcome boost to the sector.
"Certain start-ups are eligible for some tax benefit if they are incorporated before 1st April, 2023. The period of incorporation of such eligible start-ups is proposed to be extended by one year to before 1st April, 2024," she said.
Another big announcement is that the government has proposed to increase the benefit of carry forward of losses for start-ups to 10 years. "At present this relaxation applies for losses incurred during the period of 7 years from incorporation of such start-up. It is proposed to increase this period to 10 years," she said.
In its suggestion to the government, Nasscom had said that eligible start-ups should carry forward and set off losses during 10 years of incorporation.
The Finance Minister also announced that an Agriculture Accelerator Fund will be set-up to encourage agri-startups by young entrepreneurs in rural areas.
"The fund will aim at bringing innovative and affordable solutions for challenges faced by farmers. It will also bring in modern technologies to transform agricultural practices, increase productivity and profitability," she said.
Also, a National Data Governance Policy will be launched, as this will enable access to anonymised data.
The other major announcement in this year's budget is that three centres of excellence for Artificial Intelligence will be set-up in top educational institutions.
Leading industry players will partner in conducting interdisciplinary research, develop cutting-edge applications and scalable problem solutions in the areas of agriculture, health, and sustainable cities. "This will galvanize an effective AI ecosystem and nurture quality human resources in the field," she said.
Nasscom said that setting up dedicated AI CoEs is a great step that will strengthen India's leadership on AI and the use of AI for sustainable development and growth.
Anil Joshi, Managing Partner, Unicorn India Ventures, said, "FM has also given special attention to MSME and start-ups. Announcements like easing KYC, making PAN as uniform identification for business will go a long way in setting up new businesses especially in the Fintech and Insuretech segment.
"Increasing the tax relief period from 7 years to 10 years is a big announcement and will help start-ups redeploy earnings on growth of the business. Also tax rebate to MSME earning upto Rs 3 crore will also help companies to have ease of cash flow," he added.