Govt proposes to extend tax benefits to startups for one more year

New Delhi, Feb 1 (PTI) The government on Thursday proposed to extend the tax incentive for startups and investments made by sovereign wealth or pension funds for one more year till March 2025.

Finance Minister Nirmala Sitharaman said that certain tax benefits to startups and investments made by sovereign wealth or pension funds as also tax exemption on certain income of some IFSC (International Financial Services Centre) units are expiring on March 31, 2024.

"To provide continuity in taxation, I propose to extend the date to March 31, 2025," she said while presenting the interim Budget 2024-25.

The government has taken various measures to promote startups in the country. As many as 1.17 lakh startups are recognised by the government so far.

These eligible startups can avail of tax incentives such as income tax benefits under an Action Plan for Startup India.

Commenting on the proposal, Gouri Puri, Partner at Shardul Amarchand Mangaldas & Co, said that as expected, the government has exercised policy restraint under the interim budget with no tax proposals being announced.

"The extension of the sunset dates for the tax holiday for startups, and tax benefits to sovereign wealth funds and aircraft leasing business in IFSCs are indeed welcome and offer tax certainty," Puri said.

Deepa Seshadri, Partner at Deloitte India, said that with the unprecedented speed at which technologies are progressing, a well-defined legal framework is essential for encouraging responsible growth and building confidence.