Government raises age cap of start-ups from 7 to 10 years

New Delhi [India], Feb 19 (ANI): A business entity will now be considered a start-up up to 10 years from its date of incorporation or registration instead of the existing period of 7 years, the government said on Tuesday.
"An entity will (also) continue to be recognised as a start-up if its turnover for any of the financial years since incorporation and registration has not exceeded Rs 100 crore in place of existing Rs 25 crore earlier," said an official statement.
The relaxation of norms will make it easier for start-ups to thrive in the country.
Union Minister of Commerce and Industry Suresh Prabhu also cleared the proposal aimed at simplifying the process of exemptions for start-ups under the crucial section 56(2) (viib) of the Income Tax Act.
The consideration of shares received by eligible startups for shares issued or proposed to be issued by all investors will now be exempt up to an aggregate limit of Rs 25 crore.
However, this will exclude investments by non-residents, alternative investment funds category I registered with the Securities and Exchange Board of India and listed companies having a net worth of Rs 100 crore or turnover of at least Rs 250 crore.
"A start-up will be eligible for exemption if it is a private limited company recognised by the Department for Promotion of Industry and Internal Trade (DPIIT) and is not investing in building or land appurtenant thereto; land or building, or both, not being a residential house; loans and advances, other than those extended in the ordinary course of business; capital
contribution made to any other entity; shares and securities; a motor vehicle, aircraft, yacht or any other mode of transport, the actual cost of which exceeds ten lakh rupees, other than that held by the startup; and jewellery other than that held by the startup as stock-in-trade in the ordinary course of business," said the statement.
Start-ups will need to file a duly signed declaration with DPIIT for availing the exemption. The department will then forward it to the Central Board of Direct Taxes.
Prabhu had set-up a small working group of angel investors and startup founders to look into issues following protests after the government's angel tax notification on January 16. (ANI)