Budget 2023-24: Govt Extends Tax Holiday For Startups Till March 2024

In a major Budget announcement for startups, Finance Minister Nirmala Sitharaman extended the date of incorporation for startups to avail income tax benefits to March 31, 2024.

Till now, the tax holiday was available for startups incorporated till March 2023. In last year’s Budget, the minister had announced a similar extension to the startup tax holiday policy which is applicable for startups launched after 2017.

Besides, the finance minister also extended the benefit of carry forward of losses on change of shareholding of startups to 10 years of incorporation from 7 years currently.

“We propose to extend the date of incorporation for income tax benefits startups from 31.3.2023 to 31.3.2024. I further propose to provide the benefit of carry forward of losses on change of shareholding of startups from seven years of incorporation to ten years,” Sitharaman said.

In a bid to reduce to reduce the pendency of appeals, the minister also announced deployment of 100 Joint Commissioners to adjudicate small appeals. She also said that the government will be more selective in taking up cases for scrutiny of returns already received this year.

In Budget 2017, the then Finance Minister Arun Jaitley had announced that startups incorporated after March 31, 2016 could avail a tax holiday for three out of seven years, from the date of incorporation, provided that annual turnover does not exceed INR 25 Cr in any financial year.

According to the Income Tax Act, eligible startups are exempted from paying tax on a long-term capital gain if such a long-term capital gain or a part thereof is invested in a fund notified by central government within a period of six months from the date of transfer of the asset. The maximum amount that can be invested in the long-term specified asset is INR 50 Lakh.