Start-ups get a boost, tax exemption period extended to 7 years

Amid lot of other announcements, Finance Minister Arun Jaitley on Wednesday proposed extending the duration for availing tax benefit for three years within the first seven years of existence.

The exemption on profit-linked tax was earlier set at three years out of the first five years of its existence. Further, the FM has also proposed that the requirement of continuous holding of 51 per cent voting rights for carrying forward losses has been relaxed with a condition of compulsion holding of the original promoters which remained unaltered. The extension and relaxation has come as a big relief for Indian start-ups as the new companies often do not make profits in their earlier years.

On the other hand, while referring to the expectations on removal of Minimum Alternate Tax (MAT), FM called it impractical and rather proposed an extension of carry forward period to 15 years instead of the existing 10 years.

The FM has further reduced corporate tax to 25 per cent for small firms with turnover of less than Rs 50 crore in order to boost micro, small and medium enterprises (MSMEs).