Budget Impact - Start-ups & Entrepreneurs

The Finance Minister, Mrs. Nirmala Sitharaman ditched the Bahi-khata and went on to present the Union Budget 2021-22 with a ‘Made in India’ tablet, thus laying emphasis on digital transformation and Aatma Nirbhar Bharat.

The Budget 2021-22 has made some positive changes for start-ups and budding entrepreneurs. From proposing tax reliefs to providing enhanced growth opportunities, the Budget aims to boost the growth of start-ups and entrepreneurs in India.

Here are some key highlights:

Thresholds for Paid-up Capital and Turnover Hiked

The Budget proposes a hike in the requirement of paid-up capital and turnover for companies to be called small companies.

Earlier, small companies had a paid-up capital of up to Rs.50 lakhs and a turnover of up to Rs.2 crores.

These limits have been changed to include companies with paid-up capital of up to Rs.2 crore and turnover of up to Rs.20 crores.

This move will benefit over 2 lakh companies with respect to easing their compliance requirements.

Ease of Opening One Person Companies (OPCs)

Incentivisation for the incorporation of One Person Companies (OPCs).

There will be a change in the number of days for residency required to set up OPCs from 182 days to 120 days.

NRIs are allowed to open One Person Companies in India. Earlier, only resident Indians were allowed to establish OPCs. This will encourage NRI entrepreneurs to set up businesses in India. Moreover, there would be no restrictions on the turnover and paid-up capital for OPCs.

Tax Benefits

Start-ups can enjoy an extended tax holiday of one year till 31st March 2022. Moreover, the government extended the duration for claiming tax exemption on the capital gains earned from investments in start-ups by another year. This would also boost investment in start-ups and help them grow. Tax audit limits under Section 44AB have also been hiked to Rs.10 crores against Rs.5 crores for those who have 95% digitised transactions.

Gig Economy

All lot of start-ups have gig workers and this Budget announced the extension of Social security benefits to gig & platform workers.

There will also be a portal to include all information on gig workers.

Big boost for digital transactions

The Finance Minister announced a Rs. 1,500 Crore for a proposed scheme that will provide financial incentive to promote digital modes of payment.

These proposals would positively impact start-ups and entrepreneurs and boost the ‘Make in India’ initiative of the Government.

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