'Only small start-ups with turnover up to Rs 25 crore will get tax holiday', CBDT issues clarification ahead of ITR due dates

News Bharati    23-Aug-2019
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New Delhi, August 23: With the due dates arriving for the Income Tax Return filers, the Central Board of Direct Taxes has issued to release a host of tax holidays for the assesses having salaried income, small scale businesses and easy start-ups.
 
 
 
The CBDT has clarified that small start-ups with turnover upto Rs 25 crores will continue to get the promised tax holiday as specified in the section of the Income Tax Act. The Act provides deduction for 100 per cent of income of an eligible start-up for 3 years out of 7 years from the year of its incorporation.
 
According to the Finance Ministry, the CBDT also clarified that all the start-ups recognised by Department for Promotion of Industry and Internal Trade-DPIIT which fulfilled the conditions specified in the DPIIT notification did not automatically become eligible for deduction.
"Since the intention was to support the small start-up, the turnover limit of Rs 25 crore was considered reasonable for granting profit linking deduction”, CBDT said in a statement.
 
Start-ups broadly under Section 80 IAC of the Income Tax Act are allowed 100 per cent deduction of income for three years out of seven years from the year of its incorporation. The said section was inserted vide Finance Act, 2016 as an exception to the Government's stated policy of phasing out profit-linked deduction for promoting small start-ups during their initial year of operation.