What does Budget2023 Mean to Startups?
The latest budget has introduced several changes that impact startups in India. Here are the key takeaways:
Capital gains tax has increased from 10% to 20% for gains above Rs. 1 lakh. This will impact startup founders and angel investors with higher tax liabilities.
The government has extended the tax holiday for startups by one more year. Eligible startups can now avail of a tax holiday for three consecutive years out of their first ten years of operation.
One Person Companies (OPCs) can now be formed with no restrictions on paid-up capital and turnover. This will help small businesses and startups to operate as OPCs and enjoy the benefits of limited liability.
Customs duty on various items such as mobile chargers, LED lights, and solar inverters has been increased. This may impact the cost of production for startups operating in these sectors.
The time limit for re-opening tax assessments has been reduced from six years to three years. This will provide more certainty to startups and reduce their compliance burden.
In conclusion, while the new budget has brought some relief for startups with the extension of the tax holiday and introduction of OPCs, the increase in capital gains tax and customs duty may have negative impacts on the sector. Overall, the budget has attempted to balance the need for revenue generation with support for startups and small businesses.