India : Start-ups may get boost in upcoming union budget

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Start-ups may get boost in upcoming union budget

04
Jan '17

The Start-up India programme, a brainchild of the Prime Minister Narendra Modi is expected to get a boost in the upcoming union budget this year. The Department of Industrial Policy and Promotion (DIPP) has proposed various tax incentives on unlisted securities, convertible instruments and employee stock options, all expected to boost prospects of start-ups.

According to a leading daily, these proposals from the industry department comes in the midst of concerns that the Start-up India programme was not attracting interest, as there was not any tangible improvement in ease of doing business.

Among the various DIPP proposed concessions is that the period of long term capital gains be reduced to 24 months, since investing in start-ups is subject to a higher rate of tax and also risky.

The department has also proposed that ESOPs be taxed at the time of sale, when these start-ups have better liquidity to pay taxes and also so that the instruments receive a fair valuation. Another proposal is a credit guarantee fund scheme, to make finance available for these start-ups.

DIPP is also trying to address a long-pending demand of hiking the tax holiday period from three years to seven years for start-ups, which was earlier announced to help these companies meet liquidity constraints, considering the limited finances available in early days. (AR)

Fibre2Fashion News Desk – India

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