In India's latest national budget, released Wednesday, the government unveiled a new policy extending the time period within which start-ups can utilize their three-year tax holidays.
Previously three out of five years, the increase to a window of seven years now offers eligible start-ups a longer leeway to become profitable and then use the tax holiday, allowing for maximum benefit.
The budget also relaxed the conditions relating to start-ups' carrying forward of losses. Previously, founders were required to continue holding at least 51 percent of voting rights before losses could be carried forward. Now, the condition applies so long as the founder remains invested, regardless of stake.
"These moves will not just play a key role in reducing the net tax outflow for start-ups, but also serve to attract more investments in the business," said Amit Singh, co-founder of Gurgaon-based bus aggregator Shuttl. Singh called the moves "pivotal" towards encouraging the start-up community.