Finance Act, 2023--Start-up taxation

Measures to Promote MSMEs and Start-ups by Finance Act, 2023

CA. Nisha Bhandari

The Finance Act, 2023 has introduced certain amendments in the Income Tax Act with a view to promote MSMEs and start-ups. The present write-up highlights these amendments of the Finance Act.

1. Start-ups eligible for availing of tax holiday under scheme of Section 80-IAC

Deduction under Section 80-IAC is allowable to any assessee, being eligible start-up. This deduction is allowable of an amount equal to one hundred per cent of the profits and gains derived from eligible business for three consecutive assessment years. Such deduction may, at the option of the assessee, be claimed for any three consecutive assessment years out of ten years beginning from the year in which the eligible start-up is incorporated.

Eligible start up as per Explanation (ii) to Section 80-IACmeans a company or limited liability partnership engaged in eligible business which fulfils the following conditions, namely:-