Start-ups have become the cornerstone of modern economics. For every new entrepreneur, it has provided a way to start. For every new student, it has provided a way to jump straight into a professional. And for every growth seeking individual, it has provided a way to grow above the competition.
In this blog, we are going to discuss the tax exemptions of start-ups and how you can avail them.
Tax Exemptions for Start-ups
The Startup tax exemption in India contains of the best and the most helpful exemptions for the most exceptional startup companies.
- 3 year total tax exemptions for a 7 year block: Start-ups that are registered after April 2016, and whose annual turnover is not more than INR 25 Crores are exempted to pay tax on profits for 3 years during the first 7 years of their operation.
- Long term capital gains tax exemptions: Start-ups are exempted from long term capital gains tax if the said gain is invested in a fund notified by the central government within a period of six months from the date of transfer of assets.
- Tax exemptions above fair market share value: On eligible start-ups, the tax levied on investments is above the market share value. That means, the invest you got from venture capitalists or incubator is exempted to some extent.
- Tax exemptions of money made from selling residential property: Under section u/s 54 GB, the money earned from selling residential property is exempted from taxes if that money is used to invest in the startup.
To avail the above-mentioned startup tax benefit, you have to be an eligible startup. To do so, you need to be:
- Less than 7 years old.
- Have annual turnover not more than 25 Crore rupees.
- Innovative in your business
- Truly a unique business
- Incorporated as a partnership, a company or an LLP.
The startup tax in India is aimed at providing some room for the budding entrepreneurs to grow. Therefore, the tax exemption of start-ups ensures that your growth is not hindered by the current taxation regime.
Are you ready to have your own startup? If so, apply for startup registration.