Did You Check These Amendments In Startup Related Policies?

What is the period to pay off the losses as a startup? Are you aware of the latest amendments in the incentives schemes for the startup? Read this detailed story to know more about the amendments pertaining to startups!

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Amendments In Startup Indian Schemes

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In a series of recent developments, the Indian government has introduced several amendments to the startup policies and regulations, aiming to foster a conducive environment for innovation, entrepreneurship, and foreign investments. These amendments, implemented since January 2023, address key concerns and provide substantial benefits to startups operating in the country. Let's take a closer look at the changes in startup related policies that took plance in Q1 CY'23 and their implications for the startup ecosystem.


Foreign Investments Reporting - Streamlining the Process

One of the notable amendments introduced in January 2023 relates to foreign investments reporting, overseen by the Reserve Bank of India (RBI). To simplify and rationalize the reporting process, the RBI has implemented a new framework called the Single Master Form (SMF) on the FIRMS Portal. This centralized platform enables startups to submit their foreign investment reports seamlessly, reducing bureaucratic hurdles and promoting ease of doing business for both domestic and international investors.

Extended Period for Paying off Losses - Boosting Startup Viability


Recognizing the challenges faced by startups in their initial years, the Ministry of Finance announced an amendment in February 2023 that extends the period for eligible startups to carry forward and set off losses incurred during the first ten years of their incorporation. The amendment, proposed under the Finance Bill 2023, amends Section 79 of the Income Tax Act, 1961, increasing the period from the existing seven years to ten years. This extension offers startups more time to recover and stabilize their financial position, enabling them to pursue long-term growth with greater confidence.

Tax Incentive for Eligible Startups - Encouraging Entrepreneurship

In another significant move, the Ministry of Finance introduced a tax incentive for eligible startups through an amendment to Section 80-IAC of the Income Tax Act, 1961. As per the Finance Bill 2023, startups incorporated until March 31, 2024, will be eligible for the incentive. This amendment extends the period of incorporation by one year, allowing startups formed during this extended period to benefit from a tax incentive for three consecutive years out of the ten years from their date of incorporation. This tax benefit aims to attract more entrepreneurs and fuel innovation by reducing the financial burden on startups during their initial years of operation.


Long-Term Capital Gain Tax Rate - Encouraging Investment

To provide further impetus to investment in startups, the Ministry of Finance proposed a reduction in the surcharge on long-term capital gains for unlisted companies in the Finance Bill 2023. Under the new tax regime, the surcharge rate has been capped at 25%, significantly lower than the previous rate of 37%. This reduction in the surcharge brings down the effective tax rate from 42.74% to 39.0%. By lowering the tax burden on investors, the government aims to attract more capital into the startup sector and stimulate investment activities, leading to accelerated growth and increased funding opportunities for startups.

However, there is no major changes in the Startup India Policy but these recent amendments signify the government's commitment to fostering a supportive ecosystem for startups in India. By simplifying reporting procedures, extending loss-carrying periods, providing tax incentives, and reducing tax rates, policymakers aim to remove barriers and create an enabling environment for startups to thrive and contribute to the country's economic growth. These regulatory changes are expected to attract more investments, encourage entrepreneurship, and spur innovation across various sectors, cementing India's position as a global hub for startups.


As the Indian startup ecosystem continues to evolve, these amendments mark an important milestone in nurturing entrepreneurship, boosting investor confidence, and driving sustainable growth in the sector. With a renewed focus on supporting startups, the government's proactive approach is poised to yield positive outcomes and propel India towards becoming a global powerhouse of innovation and technological advancements.

Disclaimer: The information provided in this news article is based on the amendments announced by the respective government departments. For complete and accurate details, readers are advised to refer to the official notifications and consult with relevant authorities.