The union budget 2017-18, laid down by Finance Minister Mr. Arun Jaitley, on the 1st of February, had several reforms for the growing sector of the economy i.e., the start-ups. After the launch of the Start-up India Project by the Prime Minister last year, the budget also introduced several relaxing norms for the start-ups. This year’s Budget has turned out to be in line with government’s vision and policies. It made several crucial announcements impacting start-ups directly and indirectly.The budget laid down measures that could provide relief to start-ups. The most significant points were:
- As a relief to start-ups, the Government proposed to extend the time period for availing tax benefit for three years in the first seven years of existence instead of three years out of first five years, a move that will allow new ventures to extract full benefit of the permitted deductions.
- For the purpose of carry forward of losses in start-ups, the condition of continuous holding of 51 per cent of voting rights has been relaxed. However, this is subject to the condition that the holding of the original promoter/promoters continues.
- In order to allow companies to use MAT(Minimum Alternate Tax) credit in future years, it was proposed to allow carry forward of MAT up to a period of 15 years instead of 10 years.
- Besides, the Budget proposed to reduce the income tax rate for smaller companies with annual turnover up to Rs. 50 crore to 25 per cent, in order to make micro, small and medium enterprises (MSMEs) more viable and also to encourage firms to migrate to company format and hence encouraging more start-ups to come forward.