Budget 2016 for Startups: 10 Clues Why This is the Right Time to Start a New Business

I knew that if I failed I wouldn’t regret that, but I knew that one thing I might regret is not trying.

Finance Minister Arun Jaitley gave quite a boost to the ‘Startup India, Standup India’ Action Plan in the Union Budget 2016. Here are the budget highlights for SMEs and MSMEs that the new entrepreneurs must know about :

1) 100% tax exemption for the first three years (except Minimum Alternate Tax or MAT) for startups set up from April 2016 to March 2019,

2) To boost the manufacturing sector, government has scrapped duty on inputs, parts and components, and subparts for the manufacture of charger or adapter, battery and wired headsets or speakers of mobile phones as well those of routers, broadband modems, set-top boxes for Internet and TV access, digital video recorders and lithium-ion batteries.

3) There has been a 5% tax curtail for new manufacturing firms being set up from March 1, 2016. Earlier, the flat corporate tax rate was 30% (plus CESS and surcharge) but now, it has been downsized to 25%.

4) Corporate tax for companies with a turnover of less than Rs 5 crore per annum has been reduced from 30% to 29% - with a promise of bringing it down to 25% of the next four years.

5) Importers with good track record will be allowed to make deferred payment of customs duty (postpone the payment temporarily). From the coming financial year, importers will have a single-window clearance for all the key ports and various authorities.

6) Ceiling of turnover of small businesses for Presumptive Tax Scheme has been raised from Rs 1 crore to Rs 2 crore. It means that small businesses can declare their income at the prescribed rate and pay tax according to it – instead of having to maintain regular books of accounts. Businesses under this scheme can also pay advance tax by March 15 of the financial year.

7) Government will pay 8.33% of the employer’s contribution to the Employee Provident Fund for startups for the first three years. It will save startups the 12% of their employees’ basic salaries that they had to pay for EPFO and make it easier for them to hire talent – as they will be able to offer greater security of jobs for new employees.

8) The holding period for startups and privately held unlisted companies has been brought down from 3 years to 2 years to get Long Term Capital Gain.

9) Non-banking financial companies will get a deduction on up to 5% of their income for bad and doubtful debts.

10) A fund is being set up to raise Rs 2,500 crore every year (for the next 4 years) to finance startups. Capital gains on investments in regulated fund of fund for startups will be tax-free.

The Right Time to Start Your Own Business and Build Your Own Dream. So go for