1. Budget 2017: PM Modi’s ‘Achhe Din’ for IT start-ups coming? From tax to sunset clause, check out key MeitY proposals

Budget 2017: PM Modi’s ‘Achhe Din’ for IT start-ups coming? From tax to sunset clause, check out key MeitY proposals

With an aim to promote start-ups related to technology, Ministry of Electronics and Information Technology (MeitY) has proposed that there should be income tax exemptions for new units under the software technology park (STP) scheme.

By: | New Delhi | Updated: January 24, 2017 2:45 PM
With an aim to promote start-ups related to technology, Ministry of Electronics and Information Technology (MeitY) has proposed that there should be income tax exemptions for new units under the software technology park (STP) scheme. (Representative image by Reuters) With an aim to promote start-ups related to technology, Ministry of Electronics and Information Technology (MeitY) has proposed that there should be income tax exemptions for new units under the software technology park (STP) scheme. (Representative image by Reuters)

With an aim to promote start-ups related to technology, Ministry of Electronics and Information Technology (MeitY) has proposed that there should be income tax exemptions for new units under the software technology park (STP) scheme and harmonisation of tax rates for angel investors in the upcoming Union Budget 2017-18, according to The Indian Express report.

Among the recommendations, the MeitY has proposed that fiscal incentives of income tax exemption under section 10A of the Income Tax Act be restored for new STP units with annual turnover less than Rs 25 crore, or for a period of five years, whichever is earlier.

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It has also proposed of a sunset clause of three years, that is up to March 31, 2020.

Furthermore, the ministry has also proposed alignment of long terms capital gains tax for angel investors investing in early stage start-ups with that applicable for publicly listed companies. Similarly a 15 per cent short term capital gains tax is recommended for angel investors for their investments in early stage companies instead of the prevalent practice of the rate applicable according to the income tax slab of the assessee.

The MeitY has also sought continuation of the current depreciation rate of 60 per cent applicable for computers and software, compared with the 40 per cent cap applicable from 2017-18, as per the Finance Act, 2016.

STP scheme is one of them under which IT-ITeS units are eligible for various benefits like customs duty exemption on imported goods, reimbursement of Central Sales Tax (CST) and Excise Duty exemptions on procurement of indigenously manufactured goods.

The scheme is administered by the Software Technology Parks of India (STPI), an autonomous society under the Ministry of Electronics and IT.

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Significantly, the government had extended several incentives for the IT sector. These measures have been major contributory factors for the sector to flourish in India and placed the country at a dominant position in offshore services in the world. The aim was to promote micro, small and medium businesses by creating conducive environment for entrepreneurship in the field of IT and IT-enabled services (ITeS).

Notably, exports of IT software services from units under the governments Software Technology Parks (STP) scheme was estimated to have grown by nearly 9 per cent to Rs 3.19 lakh crore in 2015-16. Government data shown that IT software services exports from STP units have grown steadily during the last three years from Rs 2.73 lakh crore in 2013-14 to Rs 2.93 lakh crore in 2014-15. This further grew to an estimated Rs 3.19 lakh crore in 2015-16.

  1. Sudhir Singh
    Jan 24, 2017 at 8:32 am
    This shows thought level bankruptcy. Isn't it?
    Reply

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