#WorldThinkingDay – Good thoughts of the Government for Startups!

Startup India has been one of the core initiatives of the central government. While demonetization has been tough on many small business entities including startups, there have been a host of good steps taken to facilitate the startup ecosystem in India.

Today is World Thinking Day and here are some thoughts on what the Government has done for startups:

Continued tax sops for new startups:During the last year's annual budget the governmentoffered a 100% tax exemption for three years. This year, the government has extended the time window for tax sops from the existing period of first 5 years of operation to first 7 years.This relaxation is available for all startups formed by April 1, 2019.

Lower corporate tax: The corporate tax rate of SMEs having a turnover of up to Rs 50 crore has been reduced to 25 per cent from the current 30 per cent. The reduction in interest rates not only makes startups and SMEs more competitive but is aimed at increasing the ease of doing business.

Relief for businesses opting for presumptive taxation: Small and Medium Enterprises (SMEs) with a turnover of up to Rs. 2 Crores arenow allowed to pay income tax at 6%—instead of the earlier 8%—of profit assumptions using the presumptive taxation method under Section 44AD of the Income Tax Act, provided payments are digital in nature.

Interest deductions from business profits: Startups and small business entities can now claim tax deduction for Interest payment up to 30% of profits or the actual interest paid, whichever is lower.

Relaxation to carry forward losses: Startups have been allowed by the government to carry forward losses even if there is any change in share holding pattern beyond 51% of promoter share.

Extension of MAT credit: Minimum Alternative Tax credit is now allowed to be carried forward for a period of 15 years as against the earlier limit of 10 years.

Easy availability of Loans: The Reserve bank of India is working on a proposal to allow startups access to rupee loans under the External Commercial Borrowing (ECB) framework.

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