The first-ever digital financial budget has been announced by our finance minister and like any other, this year to the red cover tab (earlier the red cover bahi khata) of the finance minister had many offerings for the business world in particular the startup businesses.
Let’s drive through what the budget holds for startups
- In order to give a kick start and give a boost to the digital payment sector finance minister, Nirmala Sitaraman announced an Rs. 1,500 crore for financial incentives for digital payments.
- Further announced is a Fin-tech hub to be set up in the Gujarat international finance Tec-City (commonly called as GIFT City)
- Next came up the incentivization for the incorporation of one-person companies. The finance minister announced the change in the number of days for the residency required to set up one-person companies from 182 days to 120 days. Adding to this, NRI’s will also be able to incorporate one person companies in India now. This addition will certainly bring more foreign participation in the startup sector and help one-person companies to get access to credits and much more.
- Coming to tax Incentives,
The eligibility of the three-year tax holiday for startups has been extended till March of 2022 which was originally said to expire by March 2021. However, limitations of the startup’s requiring a certificate from the inter-ministerial board for the DPIIT for the same continues. The certificate however has only been provided to 329 start-ups till date. These restrictions however have not been lifted; which had always been a demand for the start-up community but this budget too didn’t bring any big news on that front.
- Capital gain exemptions for start-up investment have been extended for a period of one year, that is, March of 2022.
- The government has also made necessary announcements when it comes to inhibiting the threshold for paid-up capital and turn over of small companies (as defined in the companies act 2013). The paid-up capital limit has been increased to 2 crores while turnover has been increased to 20 crores.
- Coming to the gig economy, which also surprisingly got a mention this budget session, the finance minister said that the social security benefit will be extended to gig and platform workers. There will also be a portal where all the information about gig workers will be collected.
- Going ahead in the ease of doing business journey the Limit of tax audit has been enhanced from 5 crores to 10 crores only when business is getting 95% of its payments via digital modes.
Also Read: Budget Highlights on Direct Tax Regime
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