Union Budget 2022: Tax Incentive Period Increased for Startups by One More Year

At the Union Budget 2022 session, Minister of Finance Nirmala Sitharaman said that eligible startups established before March 31, 2022, have been provided tax incentive for three consequent two years, out of the 10-year period starting with incorporation, in view of the coronavirus-induced pandemic.

Sitharaman said, “I propose to extend the period of incorporation of the eligible startups by one more year. That is up to March 31, 2023, for providing such tax incentives.” She added, "Incentives for startups have emerged as drivers of growth for our economy over the past few years. The country has seen a manifold increase in successful startups."

Among other announcements made during the Union Budget session, a cryptocurrency tax of 30 percent was also introduced. "There has been a phenomenal increase in transactions in virtual digital assets. The magnitude and frequency of these transactions are made it imperative to provide for a specified tax regime accordingly, for the taxation of virtual digital assets, I propose to provide that any income from transfer of any virtual digital asset shall be taxed at the rate of 30 percent," said Sitharaman.

"No deduction in respect of any expenditure or elements shall be allowed while computing such income except the cost of acquisition for loss from the transfer of virtual digital assets cannot be set off against any other income," she added.

Sitharaman announced that India will get its Central Bank Digital Currency (CBDC) this year, which will be regulated by the Reserve Bank of India (RBI).

Sitharaman also said that e-passports with embedded chip and futuristic technology will be rolled out in 2022-23 to help citizens in their overseas travel.

Additionally, a Drone Shakti initiative was also announced. It will help commercialise the use of drones in different industries and will be promoted with the help of startups.