Another Boost For Start-ups Under Union Budget 2020

  • Admin
  • 06 Mar, 2020

The Union budget 2020 announced today has introduced major favourable reforms to Indian startup ecosystem which includes tweaking the start-up eligibility norms and changes in taxation of ESOPS in hands of employees

Employee Stock Option Plan (ESOP)

Startup generally use ESOP (Employee Stock Option Plans) to attract and retain talent which most of the new and young entrepreneurs give to their employees

In order to boost startup in India, it is proposed to ease the burden of taxation on ESOP by deferring tax payment by earliest of the following: 

  • 5 years; or 
  • till the employee leave the company; or 
  • sale of shares.

Start-up definition has been widended

The definition of startup has been amended by increasing the turnover limits from 25 crore to 100 crore and eligibility period of seven years has also been increased upto ten years.  

In order to extend benefit to larger start-ups, now eligible startups having turnover uptoRs. 100 crore are allowed 100% deduction on their profits for the purposes of income tax for three consecutive assessment years out of ten years. 

Earlier the limit was 25 Crore and period of eligibility was seven years.

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