Government Announces 5-Year Tax Holiday For Startups

New Delhi: In a major boost for the startups' community, Finance Minister Nirmala Sitharaman on Saturday announced a five-year tax holiday on employee stock ownership plan (ESOPs) for start-ups.

"To boost startups, the tax burden on employees due to tax on ESOPs to be deferred by five years or till they leave the company or when they sell, whichever is earliest," the finance minister said in her budget speech in Parliament.

One of the biggest steps from the Indian government in tax norms was doing away with angel tax for the startups last year.

The budget 2020-21 focuses on the improvement of ease of doing business for startups.

The proposal to set up an investment clearance cell that will provide end-to-end facilitation and support to entrepreneurs is a step in the right direction.

"Under this initiative, startup owners will receive pre-investment advisory, information on land banks, as well as a faster clearance on the state level. We believe this will present unbridled opportunities to entrepreneurs and the overall startup ecosystem in the country," said Dr Apoorv Ranjan Sharma, Co-Founder and Managing Director, 9Unicorns, India's first accelerator VC.

(IANS)