Specify the tax incentives for start-ups as amendments effective from 1st April, 2017 and accordingly apply in relation to the assessment year 2017-18 and subsequent assessment years.

Tax Incentives to startups Eligible Start-up: As per section 80-IAC, "Eligible start-up" means: a company or a limited liability partnership engaged in eligible business, which involves innovation, development, deployment or commercialisation of new products, processes or services driven by technology or intellectual property; and fulfils the following conditions: it is incorporated on or after the 1st day of April, 2016 but before the 1st day of April, 2019 the total turnover of its business does not exceed twenty-five crore rupees in any of the previous years beginning on or after the 1st day of April, 2016 and ending on the 31st day of March, 2021; and it holds a certificate of eligible business from the Inter-Ministerial Board of Certification as notified in the Official Gazette by the Central Government With a view to providing an impetus to start-ups and facilitates their growth in the initial phase of their business, the following incentives are allowed by Finance Act, 2016 from AY 2017-18: Deduction under Section 80-IAC: A deduction of 100% of the profits and gains derived by an eligible start-ups is allowed for 3 years out of initial 5 years. The conditions specified in section 80-IAC must be fulfilled to claim deduction. Capital gains exemption for investment in units of start-up funds: In order to promote the start-up ecosystem in the country, it is envisaged in 'start-up India Action Plan' to establish a Fund of Funds which intends to raise ₹2500 crores annually for four years to finance the start-ups. Keeping this objective in view, Amendment is made to insert a new section 54EE to provide exemption from capital gains tax if the long term capital gains proceeds are invested by an assessee in units of notified specified fund (start-up funds) subject to maximum limit of ₹50 lakh and minimum lock-in of 3 years. Exemption on selling house, if net consideration invested in setting-up start-up company: With an objective to provide relief to an individual or HUF willing to set-up a start-up company by selling a residential property, an amendment has been made in section 54GB to provide that long term capital gains invested in subscription of shares of an eligible start-up company shall be exempt from tax, subject to certain conditions.