Startups say FM's move to extend time limit for tax holiday helps liquidity

I-T exemption time limit for startups has been extended to 3 out of 7 years now

Indian startups say the Finance Minister Arun Jaitley's move to extend the time limit for tax holidays would help them address liquidity, which is crucial for their fledgling years. Income tax exemption time limit for startups has been extended to three out of seven years from three out of five years, earlier.

"There are many immense moves taken by finance mister like extension of 7 years holiday tax from 3 years for start-ups to encourage their entrepreneurship in coming years. This helps to boosts the entrepreneurs and generates maximum profit for the business," said Aniketh Jain, chief executive officer (CEO) & Co-Founder of SOLUTIONS INFINI.

The software product think tank iSPIRT says the finance minister has accepted few more of its Stay-in-India checklist ideas such as extending the three out of five-year income tax exemption to recognised startups to three out of seven years. The focus was also on ease of doing business with announcements like abolition of Foreign Investment Promotion Board (FIPB), rationalisation of taxation (on FPIs, convertible instruments, long term capital gains, etc), lower rate of taxation at 25% for companies with revenue of less than 50 crores, rationalisation of labour laws, shift from plan - non-plan classification to revenue and capital expenditure, carry forward of Minimum Alternative Tax (MAT) for 15 years, etc.

“These are all in line with the philosophy of iSPIRT’s Stay-in-India checklist and are expected to boost investor sentiment,” said Sanjay Khan Nagra, Member, Stay-and-List-in-India Policy Expert Team, iSPIRT, and Senior Associate, Khaitan & Co.

"For startups and MSMEs (Micro, Small and Medium Enterprises), a tax rebate of 5% up to revenue of Rs 50 crores, MAT carry forward for 15 years and the extension to 7 years for availing the 3-year tax holiday, shall leave some much needed cash in their coffers,"  Sunil K Goyal, founder and CEO, YourNest India VC Fund.