Relief for New Startup Owners in India as Government Exempt Startups from Paying Capital Gains Tax
Prime minister of India Narendra Modi announced few vigorous steps to boost startup companies among those exempting new startup companies from paying capital gains taxes which grabs lot of attentions among the investors.
Capital Gains Tax
A Capital Gains Tax (CGT) is a tax which collects on basis of capital gains of individual or corporate who runs their businesses in India. In General, CGT was more implement when an individual or corporate shows intent to sell their capital assets which likely more than the basic investment.
Below listed table describes Some Known and Unknown facts over Capital Gains Tax
|S.No||Unknown Facts that Everyone Should Know About Capital Gains Tax||Explanations|
|1||Capital Assets||Properties like home, cars and any other fixed asset considered as the capital assets. And investment properties like Stocks and Bonds are also comes under the Capital Assets|
|2||Capital Gains applicable for all not only for rich people||The person who sells the capital assets like home or any land and earns more than the “basic” amount means it should be included as the gain on your tax accounts.|
|3||Ownership Time Period||Capital gain will be calculated based on the ownership time period. If assets owned more than a year and find profit while selling means it will be calculated as long-term capital gain. Similarly, profit earned by selling assets owned in short time of period means capital gain will be calculated as short-term gain|
|4||Business Income is not related to Capital Gain||Income earned by businesses wont comes under capital gain. For example, if a person earned by selling a items from stores or fashion shops means those gain will be calculated under business income which doesn’t comes under capital gain|
|5||Exception for Low-Income Tax Payers||As per the 2008 revised capital gains tax act, low-income person who comes under the range of 10% to 15% are exempted from paying capital gains taxes.|
|6||Capital Gain Tax Rate||Normally, Capital Gains taxes are calculated on basis of applicant income with the maximum percent of 20%. However, most of the taxpayers across the nation comes within the range of 0 to 15%|
|7||Capital Gain offset Capital Loss||Owners can able to offset their capital gain tax amount with the capital losses in order to make their both ends mutual.|
|8||Short Term and Long Term Capital Gains Tax||Many people think wrongly about short term and long term capital gains tax. The Long Term Capital Gains tax amount is lesser than the tax amount of Short Term Capital Gains. Since, short-term capital gains are taxed at the same rate of your income.|
If you are one among the new startup companies in India, then it’s mandatory to pay capital gains tax if new startup offers their stocks for sell in the market. Often it is marked as additional burden for investors who forced to pay taxes without any logic reason.
Decision which Abolished Capital Gains Taxes on Startup
On considering the difficulties faced by the new startup companies in India, recently Indian government make some slight alteration in the finance bill which gives exemption to all startups from paying capital gains tax for two year periods.
It’s one of the major decisions taken by Indian government which will boost investors to invest on new startups. Also it will boost foreign investors to invest more in India as it creates investors beneficial environment.
Benefits attained by New Startups behalf of Exempting Capital Gains Taxes
- With new rule on capital gains tax, new startups companies now don’t need to pay 20% extra for selling their shares in market after holding 12 months.
- Now new startup companies can enjoy capital gains tax exempt for initial 2 years which makes them to earn more and retrieve their investment.
- New rule will boost foreign investors to invest in Indian Market as they now able to earn more profits and pay less tax in their initial periods.