Union Budget 2021: What startups get from this year's Budget

Budget 2021: To boost the funding for the startups, the finance minister in the budget has extended capital gains exemption for investment in startups.

Union finance minister Nirmala Sitharaman on Monday announced the first budget of this decade which comes amid Covid-19 pandemic. From a 137 per cent rise in the capital expenditure of the healthcare sector to a reduction in duty on gold and silver, the budget focused on many things. The Union Budget of this year was based on the tenets of the Aatmanirbhar Bharat and hence has a special focus on startups

The Union Budget of this year was based on the tenets of the Aatmanirbhar Bharat and hence has a special focus on startups. (Digpu representative image)

Here's what the budget has for the startups

In order to benefit startups and innovators, the finance minister during the budget speech proposed to incentivize incorporation of one-person companies (OPCs) by easing the conversion of the firms into any type of company at any time. The finance minister has proposed reducing the residency limit for Indian citizens to set up an OPC to 120 days from the earlier 182 days, while also allowing Non-Resident Indians (NRIs) to integrate OPCs in India. The ease in restriction is to allow OPCs to grow in India sans taps on paid-up capital and turnover.

To boost the funding for the startups, the finance minister in the budget has extended capital gains exemption for investment in startups by one more year till March 31, 2022. Not only that, but the budget also has the proposal to extend the eligibility for claiming tax relief for startups by an additional year till March 31, 2020, which will incentivize the setting up of startups.

The budget has also proposed the revision of the definition of small companies as per the Companies Act 2003. Sitharaman has proposed the revision of the small companies by exceeding the base capital from ₹50 lakh to ₹2 crore.

Launch of data analytics, artificial intelligence, machine learning-driven MCA21 Version 3.0 in the upcoming fiscal were also announced by the minister for e-scrutiny, e-Adjudication, e-Consultation and Compliance Management.