In a bid to further boost the Indian startup Ecosystem, the Finance Minister of India, Nirmala Sitharaman, in the Union Budget for 2021-22 has announced tax incentives for startups and an extension in capital gains exemption by one year.

FM Nirmala Sitharaman said,

“In order to incentivise startups in the country, I propose to extend the eligibility for claiming tax holiday for startups by one more year – till March 31, 2022. Further, in order to incentivise funding of the startups, I propose to extend the capital gains exemption for investment in startups by one more year – till March 31, 2022.”

The announcement should come as a relief for startups, as they were looking for some support from the Union Budget after the COVID pandemic devastated almost every industry.

Also, the extension of long-term capital gains by another year will serve as a relief.

Under the current regulations, any capital gains accumulated by a startup will get tax exemption if this gain or part of it is invested in a fund notified by the central government.

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