Income Tax Exemptions Available For Start-ups

  • January 06, 2020
  • Dushyant Sharma
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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.

  1. 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.
  2. 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.
  3. 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.
  4. 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:

  1. Less than 7 years old.
  2. Have annual turnover not more than 25 Crore rupees.
  3. Innovative in your business
  4. Truly a unique business
  5. 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.

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Dushyant Sharma
Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.

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