Breather for start-ups on tax relief

In a breather for start-ups, the criteria for claiming 100% deduction of profits has been relaxed.

This relief comes in form of an amendment to the Finance Bill, which was passed by the Lok Sabha on Wednesday.

In the earlier proposal, according to Jiger Saiya, Partner - Tax and Regulatory Services, BDO India, start-ups were allowed 100% deduction of profits for any 3 out of 7 years from the year of incorporation. However, to avail this incentive, the start-ups were required to comply with condition which stipulated that the turnover cannot exceed ₹25 crore in 7 years from the date of incorporation.

“This was considered restrictive, as exceeding the turnover threshold in later years could have jeopardized the claim for earlier years (even though the conditions were met in those years),” he added.

In an amendment to Finance Bill as passed by Lok Sabha, this condition is relaxed largely to the effect that turnover should not exceed prescribed limit for the year for which 100% deduction is claimed by the start-up. The linking of turnover limit directly to year of claim was welcome, Mr. Saiya noted.

Source: http://www.thehindu.com/business/Industry/breather-for-start-ups-on-tax-relief/article23245296.ece