Interim Budget extends tax benefits for startups, sovereign wealth funds, GIFT IFSC units

Finance Minister Nirmala Sitharaman

Finance minister Nirmala Sitharaman on February 1 announced an extension of tax benefits to startups, some investments made by sovereign wealth funds, and exemption for businesses housed in the International Financial Services Centre in GIFT City for another year till March 31, 2025.

The extension of such benefits by a year has become a customary feature of the last several Union Budgets.

Startups eligible under the tax benefit schemes get a 100 percent tax rebate on the profit made for a period of three years in a total time frame of ten years of operations provided that the overall annual turnover does not exceed Rs 25 crore in any financial year.

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It is aimed at helping young startups in meeting their working capital requirements especially during the crucial initial years of their operations.

In her Budget speech, finance minister Sitharaman made a slew of announcement for startups. She said that a corpus of Rs 1 lakh crore will be established for loans at low and or nil interest rates to encourage private sector to scale up research and innovation in sunrise sectors.

Further, a new scheme will be set up for deeptech innovation in defence sector.

In an appraisal of the Aadhaar-based digital identification, the finance minister said that direct benefit transfers of Rs 34 lakh crore via PM Jan Dhan accounts have helped save Rs 7.4 lakh crore for the government as leakages were plugged.

Last month, describing GIFT City as a fusion of technology and financial world, Sitharaman had said that there is a need to infuse the advantages of technology into financial services and GIFT City is designed to provide advantages to India’s entrepreneurs in accessing global finance.

Sitharaman had also said most of the global financial hubs earlier looked at capital only but the GIFT City has the distinction of getting financial services infused with technology.