A startup is a newly founded company, usually small, started by 1 or a group of people. What separates it from other young companies is that it provides a new product or service that is not being offered in the same way elsewhere. The traditional startup appears to be a shoelace operation by its design, with the founders or their friends and families supplying preparatory financing. For a startup to be eligible to register, the first criteria are such:

• An undertaking shall only be regarded as a start-up up to 10 years from the date of its registration.
• The entity's revenue after incorporation is less than 100 crore rupees for each of the preceding financial years.
• A term of up to 10 years from the date of incorporation if it is set up as a private company (as provided for in the Companies Act, 2013) or a limited liability partnership (as provided for in the LLP Act, 2008) or if it is registered as a partnership company pursuant to section 59 of the Indian Partnership Act, 1932.

Under Startup India, which is the government initiative to promote startups in India, registration of startups is made possible. This system highlights pan-Indian inventors and is at a conference on a general portal that clasps innovative ideas and advocates jobs.

Under the same scheme, startups get to take advantage of tax exemptions. Qualified start-ups have been given the following tax exemptions:

1. Exemption from tax on Long-term capital gains:

A new section 54 EE was implemented in the Income Tax Act to exclude qualifying start-ups from long-term capital gain tax if the long-term capital gain or a portion thereof is invested in a fund notified by the Central Government within a period of six months from the date of the transfer of the asset. Rs 50 lakh is the maximum sum that can be invested in the long-term defined asset. This sum shall remain invested for a period of 3 years in the specified fund. If withdrawn prior to 3 years, the exemption shall be removed in the year in which the money is withdrawn.

2. A tax holiday of 3 years in a block of seven years

The Startup incorporated after April 1, 2016, is entitled to obtain a 100 per cent tax rebate on profit in a block of seven years for a term of three years, given that annual turnover in any financial year does not exceed Rs 25 crores. Set off in the event of a shift in the shareholding pattern of carrying forward losses and capital gains allowed The carrying forward of losses in respect of qualifying start-ups is allowed if all the shareholders of the company holding voting shares on the last day of the year in which the loss was incurred continue to hold shares on the last day of the previous year in which the loss is to be carried forward. The cap of holding 51% of the voting rights remains unchanged.

3. Individual/HUF tax exemption on long-term capital gain investment in equity securities of Qualifying Startups u/s 54GB

Current provisions of 54 GB allow an exemption from tax on long-term capital gains from the selling of residential property where such gains are invested in small or medium-sized enterprises as described in the Micro, Small and Medium-sized Enterprises Act of 2006. But this provision has now been changed to include the capital gains exemption invested in qualifying start-ups as well.

4. Exemption from tax on investments in excess of fair market value

The tax imposed on investments above fair market value in qualifying start-ups has been exempted by the government. These investments include investments made by resident angel investors, by their relatives, or by funds not registered as venture capital funds. Incubators' contributions above fair market value are also excluded.

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.