Union Budget 2022-23 | Key takeaways for start-ups

On Tuesday, Finance Minister Nirmala Sitharaman presented the Union Budget 2022-23 in the Lok Sabha. Sitharaman made announcements providing a boost for start-ups in the country while stressing on an ‘Atmanirbhar Bharat.’

Here are some of the key takeaways from the Budget for start-ups:

Hailing start-ups as "drivers of growth for India's economy,” tax incentives were announced. Eligible start-ups to get 100% tax rebate on the profit made for three years out of 10 years that they have been operational provided that the overall annual turnover does not exceed Rs 25 crore in any financial year.

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Earlier, start-ups incorporated between April 1, 2016, till March 31, 2021, were eligible for this tax benefit scheme. This has now been extended by 1 year till March 31, 2023, due to the Covid-19 pandemic.

"Over the last few years, the country has seen a manifold in successful start-ups. Eligible start-ups established before March 31, 2022, had been provided a tax incentive for three consecutive years out of the 10 years of incorporation. In view of the pandemic, I propose to extend the period of incorporation of the eligible start-up by one more year which is up to 31 March 2023 for providing such tax incentives," Sitharaman said in her Budget speech.

In addition, start-ups will also facilitate ‘Drone Shakti’ through varied applications and for Drone-As-A-Service (DrAAS). “In select ITIs, in all states, the required courses for skilling will be started.”

Further, a fund raised under the co-investment model to be facilitated through NABARD for financing agriculture and rural enterprise start-ups relevant for farm produce value chain.

Sitharaman also said that start-ups will support FPOs and provide tech to farmers.

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"A fund with blended capital, raised under the co-investment model, will be facilitated through NABARD. This is to finance start-ups for agriculture and rural enterprise, relevant for farm produce value chain. The activities for these start-ups will include, inter alia, support for FPOs, machinery for farmers on rental basis at farm level, and technology including IT-based support," she said.

Promoting ‘Atma Nirbharta,’ Defence R&D will be opened for industry, start-ups and academia, with 25% of defence R&D budget earmarked.

“Private industry will be encouraged to take up design and development of military platforms and
equipment in collaboration with DRDO and other organizations through SPV model. An independent nodal umbrella body will be set up for meeting wide ranging testing and certification requirements,” Sitharaman stated.

The Economic Survey 2021-22, released on Monday, said that Delhi has replaced Bengaluru as the start-up capital of India after having added over 5,000 start-ups between April 2019 and December 2021.

India surpassed the UK and became the third-largest country in terms of unicorns, since it generated 44 unicorns in 2021. India comes in third after the US and China which added 487 and 301 unicorns respectively.

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