The Department for Promotion of Industry and Internal Trade (DPIIT) has proposed new income tax regulations for promoting India’s budding startups. DPIIT has suggested a change in Section 54B and Section 79 of the Income Tax Act. With this revision of laws, by the end of 2024, DPIIT is also aiming to set-up 50,000 new startups and even 500 new incubators in India by 2024.
According to the Income Tax Act 1961, Section 54B provide leverages to sell the residential property for long-term capital gain with tax exemption. With this acquired capital they are supposed to invest in another property within two years. Now, instead of investing in another land, an entrepreneur can use this amount for the expansion or establishment of the startup.
Section 79 of the Income Tax Act 1961, approves that no loss shall be carried forward, in case of any change in the shareholding of a company, other than the eligible startup company. Previous year income is set off only when the minimum 51% of the voting power of the company is beneficially held by the same person(s) who held at least 51% of the shares on the last day of the financial year in which the loss incurred. After the proposal of change in Section 79, carry forward losses reduced to 26% from the present 100% shareholding requirement.
Commerce Minister of India, Piyush Goyal said, this initiative is launched in all states and Union Territories of India. Only DPIIT recognized startups are eligible for a relaxation of eight laws he mentioned, amongst that Relaxations in public procurement norms is one of the laws bestowed.
With the purpose of opening 100 innovation zones in urban areas, expanding CSR (corporate social responsibility) funding to flourish Rs 10,000 crore Fund of Funds.
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