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The government on Tuesday proposed to extend the period of incorporation of eligible startups by one more year till March 31, 2023 for providing tax incentives, a move aimed at encouraging budding entrepreneurs.
Finance Minister Nirmala Sitharaman in her Budget speech said startups have emerged as drivers of growth for the economy and over the past few years, the country has seen a manifold increase in successful startups.
Eligible startups established before March 31, 2022 had been provided a tax incentive for three consecutive years out of ten years from incorporation.
"In view of the COVID-19 pandemic, I propose to extend the period of incorporation of the eligible startups by one more year, that is, up to March 31, 2023 for providing such tax incentive," she said.
Startups incorporated on or after April 1, 2016 can apply for income tax exemption.
The recognised startups that are granted an inter-ministerial board certificate are exempted from income tax for a period of three consecutive years out of 10 years since incorporation.
The minister also said that in an effort to establish a globally competitive business environment for certain domestic companies, a concessional tax rate of 15 per cent was introduced by the government for newly incorporated domestic manufacturing companies.
"I propose to extend the last date for commencement of manufacturing or production under section 115BAB by one year i.e. from 31st March, 2023 to 31st March, 2024," she added.
She said startups will be promoted to facilitate 'Drone Shakti' through varied applications and for Drone-As-A-Service (DrAAS).
"In select ITIs, in all states, the required courses for skilling will be started," she said adding defence R&D will be opened up for industry, startups and academia with 25 per cent of defence R&D budget being earmarked.
Commenting on the announcements, Saad Khan, Founder and COO of Mumbai-based startup RebelCorp said these measures would help in further strengthening the startup ecosystem in the country.