Government proposes easing tax payments for startups

NEW DELHI: The Finance Minister on Saturday proposed the easing of tax payments for new businesses in order to promote the growth of budding entrepreneurs.

To give a boost to the startup ecosystem, I propose to ease the tax burden by deferring the payment of taxes for five years or until they leave the company or when they sell, whichever is earlier, he said when presenting the Union Budget by 2020-21.

The ESOP (plan) is an important compensation component for these employees, he said.

Currently, ESOPs are subject to taxes.

Live plus This leads to a cash flow problem for employees who do not sell their shares immediately and continue to maintain the same in the long term, the minister said.

She said that new companies have become a growth engine for India's economy and over the past year, the government has taken several steps to control them and support their growth.

During their formative years, new companies generally use ESOP to attract and retain highly talented employees, he added.

In addition, the minister said that an eligible startup with a turnover of up to Rs 25 crore is allowed 100 percent of its profits during three consecutive 7-year evaluation years, if the total turnover does not exceed Rs Rs 25 million.

Con el fin de extender este beneficio también a nuevas empresas plus grandes, propongo aumentar el límite de rotación de Rs 25 crore a 100 crore existentes.

In addition, considering the fact that in the initial years, a startup may not have adequate earnings to take advantage of this deduction, I propose extending the eligibility period for the deduction claim from the existing 7 years to 10 years, Sitharaman said.