Startup India : Benefits in Budget 2016


After the launch of the “START UP INDIA ACTION PLAN” the Indian government has tried to ease out the hurdles faced by the startup industry in one way or the other.The government has encouraged young entrepreneurs to come forward and present innovative skills through new startups that will lead to overall development of the economy.

The Union Budget presented in Feb 2016 has further simplified things related to business and taxation to boost up the startups in India.Various schemes and policies have been introduced in synchronisation with the “START UP INDIA ACTION PLAN”.This has been a hot topic of discussion especially amongst young people thinking to start their own ventures.


  1. Tax exemption : A 3 year tax holiday has been provided to startups on profits from a business involving innovation,technology driven process or service,intellectual property.This means no income tax on profits for first 3 years out of a period of 5 years for startups set up from April 2016 to March 2019.However,MAT shall apply in such cases.
  2. Startup Registration made easy : As of now,it generally takes 15-20 days to get a company registered.But,this registration process has been simplified for startups. They can get registered through mobile app in one day only.
  3. Increase in Presumptive taxation limit : U/s 44 AD of Income tax act ,the turnover or gross receipts limit has been increased to Rs.2 crores (earlier it was Rs.1 crores).This will give relaxation to various assesses and free them from the burden of maintaining detailed books of accounts and getting audits done.
  4. Reduction in Corporate tax rate : In case of Companies with turnover of upto Rs.5 crores,the Corporate tax for next financial year is proposed to be reduced to 29% plus cess and surcharge.Also,the manufacturing companies incorporated after 1.3.2016 have an option to be taxed at 25%plus cess and surcharge provided they don’t claim profit or investment linked deductions.
  5. Capital Gain Tax Relief : Long term capital gains arising from sale of residential property shall be exempt from tax provided the amount is invested in the startup. So,in order to claim this exemption an individual needs to subscribe for shares of a company where the individual/HUF holds more than 50% shares in the company.
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The main aim of these policies and amendments is to facilitate the growth of new business that will indirectly benefit the economy.As new Indian startups come into action ,these will generate new employment opportunities and increased inflows in the form of funding leading to overall progress of the country.


Feel free to share your thoughts on the same !

Want some additional financial tips for running your startup,have a look at one of our popular blog posts : 5 Financial tips for Startups in India ! 

Do consider 10 Financial Planning tips to follow in your 20s ! that will help you become financially free at a young age.


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