Is it the right time to start your business – An analysis based on Budget 2020

Last Updated at: February 17, 2020
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Is it the right time to start your business - an analysis based on Budget 2020

 This post is written by Manoj Kannan

 

  1. A positive move is the proposal to increase the turnover threshold for audit to Rs 5 crore from Rs 1 crore at present. Now, micro and small enterprises will be exempted from getting their accounts book audited till Rs 5 crore.
  2. India has often imposed on startups the same policies that govern older companies operating in legacy industries. Budget 2020, though, went a step forward in addressing the pain points of young companies.
  3. For instance, the budget has suggested deferring the tax payment on employee stock option plan (ESOP) by five years or till an employee leaves the company or when he/she sells shares, whichever is earliest.
  4. “An eligible start-up having turnover up to Rs 25 crore is allowed a deduction of 100 per cent of its profits for three consecutive assessment years out of seven years if the total turnover does not exceed Rs 25 crore rupees. In order to extend this benefit to larger start-ups, The Minister proposed to increase the turnover limit from the existing Rs 25 crore to Rs 100 crore. Moreover, considering the fact that in the initial years, a start-up may not have adequate profit to avail this deduction, The Minister proposed to extend the period of eligibility for a claim of deduction from the existing seven years to 10 years,”
  1. The Minister proposed to set up an Investment Clearance Cell to provide end-to-end facilitation and support, including pre-investment advisory, information related to land banks and facilitate clearances at the central and state level.

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  1. One of the most significant announcements in the budget was the proposal to bring out a policy to allow private companies to build data-centre parks.
  2. The budget has also proposed a seed fund to support the ideation and development of early-stage startups. Additionally, the government is handholding startups on the path of innovation.
  3. The government has proposed an investment of Rs 8,000 crore ($1.1 billion) over five years in its national mission on quantum technologies and applications. Entrepreneurs believe this could go a long way in giving a boost to the Indian economy.
  1. It is great that the government has rolled out reforms like a five-year tax holiday for ESOP, tax exemption for startups with a turnover of less than Rs 100 crore for 10 years, reducing dividend distribution tax (DDT), and the establishment of a Seed fund that will definitely spur the startup activity in the coming years.
  2. While many believe there is more work to be done on the policy level with deeper and stronger collaboration, the budget had several big wins for startups. However, it will be interesting to see how this will translate on-ground.

0

Is it the right time to start your business – An analysis based on Budget 2020

249

 This post is written by Manoj Kannan

 

  1. A positive move is the proposal to increase the turnover threshold for audit to Rs 5 crore from Rs 1 crore at present. Now, micro and small enterprises will be exempted from getting their accounts book audited till Rs 5 crore.
  2. India has often imposed on startups the same policies that govern older companies operating in legacy industries. Budget 2020, though, went a step forward in addressing the pain points of young companies.
  3. For instance, the budget has suggested deferring the tax payment on employee stock option plan (ESOP) by five years or till an employee leaves the company or when he/she sells shares, whichever is earliest.
  4. “An eligible start-up having turnover up to Rs 25 crore is allowed a deduction of 100 per cent of its profits for three consecutive assessment years out of seven years if the total turnover does not exceed Rs 25 crore rupees. In order to extend this benefit to larger start-ups, The Minister proposed to increase the turnover limit from the existing Rs 25 crore to Rs 100 crore. Moreover, considering the fact that in the initial years, a start-up may not have adequate profit to avail this deduction, The Minister proposed to extend the period of eligibility for a claim of deduction from the existing seven years to 10 years,”
  1. The Minister proposed to set up an Investment Clearance Cell to provide end-to-end facilitation and support, including pre-investment advisory, information related to land banks and facilitate clearances at the central and state level.

Get Legal Advice now

  1. One of the most significant announcements in the budget was the proposal to bring out a policy to allow private companies to build data-centre parks.
  2. The budget has also proposed a seed fund to support the ideation and development of early-stage startups. Additionally, the government is handholding startups on the path of innovation.
  3. The government has proposed an investment of Rs 8,000 crore ($1.1 billion) over five years in its national mission on quantum technologies and applications. Entrepreneurs believe this could go a long way in giving a boost to the Indian economy.
  1. It is great that the government has rolled out reforms like a five-year tax holiday for ESOP, tax exemption for startups with a turnover of less than Rs 100 crore for 10 years, reducing dividend distribution tax (DDT), and the establishment of a Seed fund that will definitely spur the startup activity in the coming years.
  2. While many believe there is more work to be done on the policy level with deeper and stronger collaboration, the budget had several big wins for startups. However, it will be interesting to see how this will translate on-ground.

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