Finance Minister Nirmala Sitharaman announced incentives for the startup ecosystem in the country and extended the benefit of carry forward of losses from the current 7 years to 10 years from the date of incorporation of the firm. Also, the time period on income tax benefit to companies registered as startups increased further by another year. Sitharaman also acknowledged that India has the third largest ecosystem of startups globally.
Talking about the announcement, Sandeep Jhunjhunwala, Partner, Nangia Andersen LLP, said, “India is the third largest ecosystem for startups which is a house to the entrepreneurial growth it witnesses. To further provide impetus to startups and continue to encourage the entrepreneurial spirit, the Budget proposes to extend the date of incorporation for claiming tax holiday by a year to March 31, 2024 and also extend the benefit of carry forward of losses from its current 7 years to 10 years from date of incorporation.”
The government has previously taken various steps to promote startups in the country. It had, in April 2021, rolled out the Startup India Seed Fund Scheme (SISFS) with an aim to provide financial assistance to start-ups for proof of concept, prototype development, product trials, market-entry, and commercialisation. Further, the finance minister said that for business establishments required to have Permanent Account Number, PAN will be used as a common identifier of all digital systems of specified government agencies, and this will bring Ease of Doing Business.
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For the MSME segment, Nirmala Sitharaman announced revamping the credit guarantee scheme under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) with the infusion of Rs 9,000 crore in the corpus, effective April 1, 2023. The finance minister said that the revamp will enable additional collateral-free credit of Rs 2 lakh crore to MSMEs while the cost of credit will be reduced by 1 per cent.