Finance bill and impact on startups

Startups are allowed 100% deduction of profits for any 3 out of 7 years from the year of incorporation.

To avail this incentive, the startups were required to comply with condition which stipulated that turnover cannot exceed Rs.25 crore in 7 years from the date of incorporation.

This was considered restrictive, as exceeding the turnover threshold in later years could have jeopardized the claim for earlier years (even though the conditions were met in those years).

In an amendment to Finance Bill as passed by Lok Sabha today, the condition is relaxed largely to the effect that turnover should not exceed prescribed limit for the year for which 100% deduction is claimed by the start-up.

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