Budget 2019 may offer tax benefits for startups and simpler norms for ESOPs

  • The Department for Promotion of Industry and Internal Trade is looking to offer tax sops to startups, according to reports.
  • This would include the tax levied on Employee Stock Options.
As the date for the Union Budget inches closer, the Department for Promotion of Industry and Internal Trade has held discussions to offer tax sops to startups, according to reports

The government is looking to have simpler regulations for tax levied upon Employee Stock Options (ESOPs).

In the interim budget announced in February, startups had got barely any mention by then acting Finance Minister Piyush Goyal. Entrepreneurs in the country were disappointed with the complete miss on startups by the otherwise startup-pro Modi government.

One of the pressing worries of the startup ecosystem in India is the angel tax which the government has looked into. In May, DPIIT secretary Ramesh Abhishek had said that 541 startups had been given exemption from angel tax.

In February, the DPIIT had announced that an entity will be considered a startup for a period of 10 years from the date of its incorporation as opposed to the earlier norm of seven years.

Similarly, an entity will continue to be recognised as a start-up if its turnover for any of the financial years since incorporation and registration has not exceeded ₹100 crore in place of ₹25 crore earlier.

The DPIIT is also looking at getting a definition for “accredited investors” for angel investments.

To avail exemption from angel tax, a startup has to be recognised by DPIIT and the numbers there too have shot up. From 16,171 recognised startups in February, today there are 19,167 recognised startups, according to the official data on the Startup India website.

See Also:
The government can be an 'angel' if it replaces tax with incentives, explains a startup groomer
Indian government finally comes to a decision on Angel Tax, changes definition of startups
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