The benefits of tax relief are not provided to every startup firm whatsoever. They are only provided to those who fulfill the eligibility criteria set by the government. The candidates which can receive the benefits of tax are –
- That startup needs to be taken as a company or LLP.
- It should be incorporated between the period of 1st April 2016 to 1st April 2021.
- It should be a business that involves growth, development, employment, or marketing of new products driven by technology.
- That startup should not be made by the reconstruction of any previous business.
- Turnover of any financial year should not exceed Rs. 100 crores.
There are many benefits that startup firms receive from the government and that makes a huge impact on their overall growth. This article will discuss the major tax benefits that startups receive.
1. Tax Exemption –
This is the major benefit that is provided to startups that they won’t have to pay the tax for 3 consecutive years. This has to be decided by the company in which 3 consecutive years out of 10 years they need the tax exemption scheme to be applied.
For this benefit, the startup should be giving job opportunities to certain people and has to maintain the overall development. They can work as hard as possible and can enjoy the unfiled tax returns.
2. Capital Gain Tax Exemption –
The benefits that businesses take after investing in stocks are also characterized as taxable. They get an Exemption of 20% of capital gain tax, that is the tax exemption on receiving profits after selling the capital valuables like stocks, shares, etc.
3. Exemption Of Angel Investment Tax –
This means that those people who are friends and family members (angel investors) who are not even registered as Venture Capitalist Funds, are also tax-free. They can also publish shares at higher rates to their investors without worrying about taxation.
These were some of the main tax exemptions that are provided to the startup firms so that they can work on themselves and the development that would also benefit the country.