Start-ups established during the block period of 01/04/2016 to 31/03/2022 were eligible for tax incentives in three consecutive years out of ten years from the date of incorporation. In view of the Covid pandemic, the budget provides for extending the block period for eligible start-ups by one more year, i.e. extension of the outer timeline/ terminal date from 31/03/2022 to 31/03/2023 for incorporation and setting up of start-ups to be eligible to get such tax incentives, which is a booster for the start-up community, vide Clause 22 of the Finance Bill 2022 (budget 2022-23):
1. The existing provisions of the section 80-IAC of the Act inter alia, provide for a deduction of an amount equal to one hundred percent of the profits and gains derived from an eligible business by an eligible start-up for three consecutive assessment years out of ten years, beginning from the year of incorporation, at the option of the assesses subject to the condition that,-
(i) the total turnover of its business does not exceed one hundred crore rupees,
(ii) it is holding a certificate of eligible business from the Inter-Ministerial Board of Certification, and
(iii) it is incorporated on or after 1st day of April, 2016 but before 1st day of April 2022.
2. Due to COVID pandemic there have been delays in setting up of such units. In order to factor in such delays and promote such eligible start-ups, it is proposed to amend the provisions of section 80-IAC of the Act to extend the period of incorporation of eligible start-ups to 31st March, 2023.
3. This amendment will take effect from 1st April, 2022 and will accordingly apply in relation to the assessment year 2022-23 and subsequent assessment years.
Summary of Direct/ Indirect Tax Proposals of Union Budget 2022-23