StartupIndia-Income Tax exemption for first 3 years good or bad
StartupIndia program by Government of India very much discussed topic among entrepreneurs. Respected prime minister of India announced 3 years IT exemption to startups.
My thoughts on this announcement is not in line with enthusiasm shared by many startup founders. This is a announcement that we should not cheer.
Reson for saying this is that 90% startups do not make any profit during first few years. Income Tax exemption will deprive them ustilising the losses also.
Tax exemption on profits will also exempt the losses. As per Income Tax profit is not only profit but also loss, traditionaly if you loss in a year and next year if you have profits, you can setoff the loss with profits.
But exemption will disallow the setoff of loss after 3 years. Though it is too early to say that this is a bad move, but we should wait for the documented policy before jumping on any conclusion.
What i interpreted is that profits fro 3 years shall be exempted from income tax and not the first 3 years. So whenever they make profits ..that shall be exempted for 3 years.