Startup Tax Benefits Extended Until 2030; Ecosystem Welcomes Move

The Indian startup ecosystem has been boosted with Finance Minister Nirmala Sitharaman’s announcement to extend startup benefits, including the incorporation deadline, by five years until 1 April 2030.

The move ensures that startups recognized by the Department for Promotion of Industry and Internal Trade (DPIIT) can continue to avail tax benefits under Section 80-IAC of the Income Tax Act, 1961.

While presenting the Union Budget 2025-26 on Saturday, Nirmala Sitharaman stated, “We continue to support the Indian startup ecosystem. I propose to extend the period of incorporation by five years to allow the benefit available to startups, which are incorporated before 1 April 2030.”

Industry leaders welcomed the decision. Sanjiv Singh, joint secretary at DPIIT, described it as a significant step that strengthens the startup landscape.

Tax Exemption Details For Startups

Rahul Charkha, partner at Economic Laws Practice, explained that under Section 80-IAC, eligible startups can claim a 100% tax exemption on profits for three out of ten years from their incorporation.

However, their annual turnover must remain below Rs 100 crore during the eligible period.

Abhishek A Rastogi, founder of Rastogi Chambers, noted that more startups can now benefit from tax exemptions, improving their cash flow and profitability in their formative years.

Additionally, he noted, “With extended tax benefits, startups become more attractive investment avenues for venture capital and angel investors, as higher profitability can now expected in the early stages.”

ChrysCapital’s partner and COO, Ashley Menezes, emphasized the importance of policy consistency, stating, “This additional runway will provide young ventures with a stable policy framework to scale, create jobs, and contribute meaningfully to India’s economic growth.”

Several startup leaders echoed this view. Aditya Kapoor, co-founder and COO of Astroyogi, said the budget’s focus on ease of doing business would foster innovation.

“Budget 2025’s focus on streamlining processes and fostering ease of doing business is commendable. The extended incorporation periods will create a more conducive environment for innovation and growth,” he asserted.

In addition, the government has unveiled plans to establish a Fund of Funds (FoFs) with a Rs 10,000 crore allocation.

Gajendra Jangid, co-founder of CARS24, highlighted, “The Budget reaffirms India’s commitment to economic growth, infrastructure, and inclusivity while fostering an ecosystem where startups and businesses can thrive. The extension of tax benefits provides the much-needed financial relief and stability for early-stage ventures.”

Stability & Long-Term Benefits For Startups

Pankit Desai, CEO of Sequretek noted, “The extension will allow more startups to enjoy benefits like extended tax concessions. It is a vital move as startups often require longer timelines to become profitable.”

“Extending incorporation benefits for startups until 2030 provides long-term stability and incentivises innovation, contributing to sustained economic growth,” said Akshay Sarma, Chief Financial Officer (CFO) of fintech firm Axio

Apart from the extension, the Budget also provided much-needed clarity on various taxation matters, particularly regarding the AIF industry, ensuring both parity and transparency.

“Classifying securities held by an Indian AIF as a capital asset under Section 2(14) will ensure that all gains from their sale will taxed as capital gains, not as business income. This offered to foreign portfolio investors (FPIs) in 2014 to reduce litigation. Indian AIFs now have the same clarity,” added Siddarth Pai, Founding Partner, 3one4 Capital, and co-chair of the regulatory affairs committee at the Indian Venture and Alternate Capital Association.

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