To overcome the pandemic time, Finance Minister Nirmala Sitharaman has announced few favors for Startups. In the new Budget, the tax holiday has been extended for one more year. In addition to that, the capital gains exemption has also extended for one extra year up to March 2022.
Tax Holiday and Exemption Limit Extension
“In order to incentivize startups in the country, I propose to extend the eligibility for claiming tax holiday for startups by one more year to March 31, 2022,” Finance Minister Nirmala Sitharaman said.
She also gives a further boost to all startups with investment favorable news. Presenting her 3rd union budget, she further said that in order to have an easy funding environment, I propose to extend the capital gains exemption for investment in startups by one more year to March 31, 2022″.
As per the law, a startup or LLP established on or before 31 March 2022 is eligible for a 100% tax rebate on its profits. Earlier this date was up to 31 March 2021.
Indian Startups are trying to overcome the pandemic time with the help of Government initiatives like Make in India, Vocal for Local, Atamnirbhar Bharat.
Other Initiatives for Startups by Government
In other key highlights of the budget, Rs 15,700 crore were allocated to MSMEs for boosting their operations. The research and Development sector got a Rs 50,000 crore boost to strengthen its activities.

The whole budget was dedicated to the six major sectors that are considered as main pillars for future development. It includes health and wellbeing, Infrastructure, Inclusive development, Development of human capital, R&D, Minimum government, maximum governance. The first time, the budget was presented through a tablet instead of a traditional bahi khata.
As per the latest data by ET survey, India has the third-largest startup ecosystem in the world. With the updated data till the last month of 2020, India has a total of 41061 government recognized startups. Among those, around 39000 startups created more than 4.7 lakhs of jobs. Out of these startups, 38 startups gained unicorn status. 12 of these unicorn startups achieved this feat in 2020 alone.
The Indian government has initiated different schemes for startups. Defining startups, easy regulations, Income Tax exemptions are a few of those initiatives. The government also set up a 10000 crore fund of funds run by Sidbi.
The Indian government has also approved a seed funding budget of 945 crores recently for Indian Startups. Seed funding scheme will provide an initial boost for startups when they conceptualize a product, market-entry, and commercialization.