What has been announced by the Finance Minister for the startups in the latest budget2020?
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The FM has extended the tax relief for the startups. As per the earlier law, a startup with a turnover of up to Rs 25 crores was allowed a 100% tax deduction on profits for seven years. She has increased the said limit from Rs 25 crores to Rs. 100 crores. Also, the period of eligibility for claiming the deduction has been increased from 7 years to 10 years.
In the opinion of FM, this relief would help startups to take more risks, innovate on a larger scale and will contribute to the economy in a much more significant manner. The FM has also provided tax relief to Employee Stock Options (ESOPs) given to startup employees:
At present, ESOPs are taxable as perquisites at the time of exercise. In the latest budget, the FM has proposed to ease the burden of taxation on the employees by deferring the tax payment by five years or till they leave the company or when they sell the shares, whichever is the earliest.
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