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Tax sops for VCs, 10-yr tax holiday for start-ups on Kiran Mazumdar-Shaw's Budget wishlist

​Kiran Mazumdar Shaw believes a 10-year tax holiday can boost the start-up sector.​
Kiran Mazumdar Shaw believes a 10-year tax holiday can boost the start-up sector.
NEW DELHI: Expectations are running high as the Narendra Modi-led NDA government is all set to present its first Union Budget in its second consecutive term.

India Inc captains, too, are optimistic about a growth-infused Budget, and hoping that the Government will unveil some robust measures.

Kiran Mazumdar-Shaw took to Twitter to articulate her Budget wishlist of sorts, and also expressed concern on what's slowing down start-ups. In a tweet, the Chairperson and Managing Director of Biocon wrote that the sector will stay stunted unless tax sops favour angel investors and venture capitalists.

She further added that new businesses desperately need a 10-year tax holiday provided by the Government. This break, in turn, will boost foreign investments and reduce/eliminate sales taxes as venture funding is unable to pull them back up.



Reports suggest that the Government has plans to update the tax benefits for start-ups in order to facilitate entrepreneurship, and boost employment for a better economy. The Department for Promotion of Industry and Internal Trade (DPIIT) and the revenue department are also understood to have discussed a package of tax sops in the forthcoming Budget, including simplified norms for levying a tax on employee stock option schemes (ESOPs) at the time of sale of shares. DPIIT is discussing the possibility of giving angel tax benefits to Category II alternate investment funds (AIFs), a concession that is currently available to certain Category I investors.

The department is seeking other benefits for AIFs to provide a thrust to fund startups. For instance, it has suggested that, just like profit of AIFs is a pass through for limited partners, the loss should also get the same treatment. Similarly, there is also a proposal for GST exemption for fund managers based in India as the levy does not apply to those offshore. But this proposal is unlikely to be accepted and in any case GST-related issues are now outside the ambit of the Budget.

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