Finance Minister Arun Jaitley in a major relief for start-ups proposed extending the time period for availing tax benefit for three years in the first seven years of existence.
“...the profit-linked deduction available to the start-ups for three years out of five years is being changed to three years out of seven years,” Jaitley said in Budget Speech on Wednesday.
Losses have been carried forward in start-ups, the condition of continuous holding of 51 per cent of voting rights has been relaxed.
This is subject to the condition that holding of the original promoter/promoters continues. This comes as a relief to startups as they do not make profits in the first few years of operations.
On issue of removal of Minimum Alternate Tax (MAT), Arun Jaitley said that “it is not practical to remove or reduce MAT at present”.
“However, in order to allow companies to use MAT credit in future years, I propose to allow carry forward of MAT up to a period of 15 years instead of 10 years at present,” he added.
To make micro, small and medium enterprises (MSMEs) more viable and encourage firms to migrate to company format, the finance minister has also proposed to reduce the income tax for smaller companies with annual turnover up to Rs 50 crore to 25 per cent.
With PTI Inputs