Tuesday, March 15, 2016

Start-ups with annual turnover of less than Rs 25 cr to get tax breaks

A company with an annual turnover of less than Rs 25 crore in the first five years will be eligible
for tax breaks and other incentives under the government's start-up policy if it fulfils certain conditions. According to the definition notified by the department of industrial policy and promotion
(DIPP), an entity will be called a start-up up to five years from the date of its incorporation/
registration provided its turnover for any of the financial years doesn't exceed Rs 25 crore. It must
be working towards "innovation, development, deployment or commercialisation of new products, processes or services, driven by technology or intellectual property". A company working on "significantly improved existing product or service or process that will create or add value for customers or workflow" will also be eligible for incentives if it fulfils other conditions. However, any such entity formed by "splitting up or reconstruction of a business already in existence" won't be considered a start-up. Prime Minister Narendra Modi had on January 16 unveiled a package of incentives to boost the start-up eco-system in the country, offering such firms a tax holiday and inspector raj-free regime for three years, capital gains tax exemption and a Rs 10,000-crore corpus to fund them.

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