Budget 2023: From ESOPs taxation to tax relief incentive; what startups want

Budget 2023 After a tough 2022 due to funding crunch and macroeconomic uncertainty, Indian startups have high hopes from the upcoming Union Budget.

BUDGET 2023 FOR STARTUPS

Single window clearance is one of the major demands for Indian startups as opposed to registration with multiple authorities to claim tax incentives.

ESOP taxation: Startups want a modification in ESOP taxation. NASSCOM has recommended that the facility of deferment of ESOP tax be given to a wider pool of startups.

Minimum alternative tax (MAT) Startups and Nasscom also want minimum alternative tax (MAT) for eligible startups to be reduced to 9 percent from 15 percent. This will enable small businesses to meet their working capital requirements.

Tax relief incentive: Another demand is to increase the angel investor pool at the seed stage for Indian startups, offer a tax relief incentive of 30 percent of the cost of equity shares set off against the angel investor’s income tax liability for the year in which the investment was made.

Long term capital gains tax: LTCG on unlisted shares and public stock investments to be brought on parity. “The current tax provisions do not provide a level playing field to domestic investors vis-à-vis foreign investors", says NASSCOM.