BENEFITS GRANTED TO NEW STARTUPS
The budget for the F.Y.2016-17, has been presented by the H’ble Finance Minister, Sh. Arun Jaitley . With a view to promote the Start-Up culture in India and to develop entrepreneurship, the F.M.
Meaning of new Startups
Business involves innovation, development, deployment or commercialisation of new products, processes or services driven by technology or intellectual property are eligible to get benefits under the proposed model.
Conditions to be fulfilled
- 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 holds a certificate of eligible business from the Inter-Ministerial Board of Certification as notified in the Official Gazette by the Central Government.’
- Business shall not formed by splitting up, or the reconstruction, of a business already in existence:
Provided that this condition shall not apply in respect of a start-up which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertaking as referred to in section 33B, in the circumstances and within the period specified in that section;
-Business shall not formed by the transfer to a new business of machinery or plant previously used for any purpose.
Benefits granted
100% deduction of the profits and gains from the Eligible Business for 3 consecutive years (at the option of the assesses) out of first 5 Years from the year of incorporation is available.
Still Tax is required to be paid
The assessee will be liable to Minimum Alternate Tax (MAT) under section 115 JB of the Income Tax Act, 1961. However, the credit of the MAT Tax can be utilized in subsequent year to reduce the peak tax rate of the business.
Further, any income other than the Profit & Gains of the Eligible Business accruing to the Start-Up shall be taxable.
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