Budget 2022 Decoded – Start-up Sector

The three major benefits extended to any company, registered as a Startup with the Department for Promotion of Industry & Internal Trade, Ministry of Commerce & Industry, Government of India, are as below:

• The incorporation period for eligible start-ups  has been extended by one year i.e. from 31 March 2022 to 31 March 2023. This means that start-ups that have been incorporated on or before 31 March 2023 can also now claim income tax holiday;
• Surcharge on long term capital gains on transfer of capital asset (including unlisted equity shares) to be capped at 15% (vis à vis erstwhile highest surcharge rate of 37%). Previously, this cap of 15% surcharge on capital gains was limited to listed equity shares and mutual fund units, which now has been extended to all unlisted assets;
• Subject to conditions, provisions introduced for filing updated income tax return within 24 months from the end of assessment year with payment of 25% or 50% (where return furnished after 12 months from the end of assessment Year) additional tax on aggregate of tax and interest.

The following few were the focal points of the Union Budget 2022, based on sectors:

• Focus on start ups to promote ‘drone shakti’ for promotion of drone usage. Use of ‘Kisan Drones’ to be promoted for crop assessment, digitization of land records, spraying of insecticides, and nutrients;
• Financing of agricultural and rural start up through the National Bank for Agriculture and Rural Development (NABARD).
• A dedicated fund is proposed to be created with blended capital, raised under the co-investment model, to be utilised by NABARD to finance start-ups for agriculture & rural enterprise; and
• An executive committee is proposed to be set up for examination of regulatory framework for the venture capital and private equity industry, to scale up investments in start up ecosystem. With the continuous growth in the digital & start-up ecosystem, this was a long standing requirement of the industry.

• Yes, as per the Union Budget 2022, the timeline to claim input tax credit, by a registered person, under the GST Act, 2017 has been extended till 30 November of the following financial year.
• This means that the time limit for claiming input tax credit, under Section 16(4) of the GST Act, 2017 has been extended to 30th November of the succeeding financial year as against the due date of September’s Form GSTR 3B.
• The Union Budget, 2022 proposed to extend the period of incorporation of eligible start-ups for claiming tax holiday under section 80-IAC of the IT Act by 1 more year i.e., before 1 April 2023.