{"id":29064,"date":"2020-02-19T18:53:14","date_gmt":"2020-02-19T13:23:14","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=29064"},"modified":"2020-02-20T14:49:18","modified_gmt":"2020-02-20T09:19:18","slug":"how-budget-2020-boosts-the-startups-of-india","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/how-budget-2020-boosts-the-startups-of-india\/","title":{"rendered":"How Budget 2020 Boosts the Startups of India?"},"content":{"rendered":"

The Finance Minister in the Union Budget 2020-2021 had made some significant announcements for the Startup community. The startups being the key focus area in the budget, the center’s move has been acclaimed by the Indian startup ecosystem. Nirmala Sitharaman, in her Budget speech, announced that a startup with an annual turnover of up to Rs. 25 crores would be allowed a deduction of 100 percent of its profits. Also, she said that in case a startup’s total turnover exceeds Rs. 25 crores in a financial year, the turnover limit will be increased from the existing Rs. 25 crores to Rs. 100 crore for the purpose of claiming exemption. The Government will also provide tax relief<\/strong> to employees eligible for Employee Stock Options (ESOPs). She also announced Seed Fund<\/a><\/strong> aid funding for early-stage startups.<\/p>\n\n\n\n

How to register Startups in India?<\/h2>\n\n\n\n

For registration of startup, four significant steps\nmust be followed:<\/p>\n\n\n\n

\"steps<\/figure><\/div>\n\n\n\n

Key Points in Budget 2020 for Startups<\/h2>\n\n\n\n
  1. The Government recommends providing early life funding which includes a seed fund to support ideation and development for early-stage Startups.<\/li>
  2. During the initial years, the Employee Stock Option Plan or ESOP was an essential component of compensation for startup employees. Currently, the Employee Stock Option Plan or ESOPs are taxable as profits at the time of exercise. These may lead to a cash-flow problem for the employees who do not sell the shares immediately and continue to hold the same for the long-term. To boost the startup ecosystem, the Finance Minister proposed to ease the burden of taxation on the employees by extending the tax payment by five years or till they leave the company or when they sell their shares, whichever is earlier.<\/li>
  3. Furthermore, a startup having turnover up to Rs. 25 crores is offered a deduction of 100% of its profits for three consecutive assessment years, out of seven years if the total turnover does not exceed Rs 25 crore. For extending this benefit to larger startups, Nirmala Sitharaman in the budget proposed to increase the turnover limit from the existing amount of Rs 25 crore to Rs 100 crore. Moreover, because in the initial years, a startup may not have adequate profit to avail this deduction, the period for the claim is extended from the current 7 years to 10 years.<\/li><\/ol>\n\n\n\n

    Government Provides Tax Relief to Startups in Budget 2020<\/h2>\n\n\n\n

    Tax Benefit on Increase in Turnover limit and time
    <\/h3>\n\n\n\n

    The central Government\nannounced some tax relief in the budget for startups. The turnover limit and\ntime span to claim tax relief has been increased for startups.<\/p>\n\n\n\n