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Niramala Sitharaman on Saturday (February 1) announced that the government plans to extend the period of incorporation by five years to allow benefits to startups incorporated before April 1, 2030
in a bid to improve credit, the FM said that the guarantee fee under the credit guarantee scheme for startups for credit between INR 10 Cr to INR 20 Cr for 27 focus sectors will be cut to 1%
The FM also said that the credit guarantee cover will be enhanced for MSMEs opting for INR 5 Cr to INR 10 Cr loans.
To support the growth of the Indian startup ecosystem, finance minister Niramala Sitharaman on Saturday (February 1) announced that the government plans to extend the period of incorporation by five years to allow benefits to startups incorporated before April 1, 2030.
“We continue to support the Indian startup ecosystem. I propose to extend the period of incorporation by 5 years to allow the benefit available to startups, which are incorporated before 1.4.2030.” the minister said in her budget speech 2025.
The move will allow more startups to avail tax benefits like income tax breaks under Section 80-IAC.
Sanjeev Kumar, joint secretary of DPIIT, said in a post on LinkedIn that the move will help all the startups recognised by the DPIIT avail 100% tax deduction on profits for three consecutive years within the first 10 years of their incorporation.
Besides, in a bid to improve credit, the FM said that the guarantee fee under the credit guarantee scheme for startups for credit between INR 10 Cr to INR 20 Cr for 27 focus sectors will be cut to 1%.
While the FM didn’t announce the name of the sectors, she said these are the segments which are important for ‘Atmanirbhar Bharat’ initiative.
The FM also said that the credit guarantee cover will be enhanced for MSMEs opting for INR 5 Cr to INR 10 Cr loans. This would result in an additional credit of INR 1.5 Lakh Cr in the next five years.
To further bolster the Indian startup ecosystem, the FM announced setting up a new Fund of Funds for startups with expanded scope and a fresh contribution of another INR 10,000 Cr.
Terming investment as the third growth engine for transforming India, FM Sitharaman said that the government will explore setting up a fund of funds for the deeptech sector to catalyse the next generation of startups.
She also allocated INR 20,000 Cr for research and innovation initiatives of the private sector.
