- According to the new rules, an entity will be considered a startup up to 10 years from the date of its incorporation and registration, up from the earlier duration of seven years. Similarly, an entity will continue to be recognized as a startup if its turnover for any of the financial years since incorporation and registration does not exceed ₹100 crore, up from ₹25 crore earlier.
- The income-tax department also issued a notification last month stating that registered startups would be exempt from angel tax, provided they meet certain conditions.
- According to income tax rules, a startup can be a company or a limited liability partnership engaged in a business which involves innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property. A startup’s paid-up capital should not exceed ₹10 crore.
- A startup needs to hold a certificate of “eligible business” from the Inter-Ministerial Board of Certification to get various tax benefits. For instance, Section 80-IAC, which was introduced in the Finance Act, 2016, states that an eligible startup shall be allowed a deduction of an amount equal to 100% of the profits and gains for a consecutive period of three years. That means a startup need not pay tax on profit for a consecutive period of three years.