Wednesday, May 11, 2016

Good News : LLP is also Eligible Startup. Section 80IAC Amended !

Finance Bill 2016 has been passed by Lok Sabha ( Lower House ) and has moved to Rajya Sabha ( Upper House) for debate and ratification . Since it is money bill, one should take for granted that whatever is passed by Lok Sabha will also be passed in Rajya Sabha. So , here is one good news for startups owners. The amended Finance Bill 2016 has brought in amendment to Income Tax Act under which  LLP has also been granted the tax profit exemption . 

Section 80IAC Amended to Include LLP as Eligible Startup

Readers may already be aware that the original Finance Bill, 2016 proposed a new section 80-IAC of the Income Tax Act to provide 100 percent deduction for 3 consecutive assessment years to an 'eligible Start-up' engaged in an eligible business. But the definition of eligible startup was missing the word "Limited Liability Partnership ". 

In other words, exemption was not allowed to an LLP which is startup under the government's scheme . Now , the government has amended and rectified section 80IAC .Please read the amended definition of Eligible Startup:

(ii) “eligible start-up” means a company or a limited liability partnership engaged in eligible business which fulfils the following conditions, namely:—  
(a) it is incorporated on or after the 1st day of April, 2016 but before the 1st day of April, 2019; (b) 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;  
(c) it holds a certificate of eligible business from the Inter-Ministerial Board of Certification as notified in the Official Gazette by the Central Government; and 
 (iii) ‘‘limited liability partnership’’ means a partnership referred to in clause (n) of sub-section (1) of section (2) of the Limited Liability Partnership Act, 2008.’.
(a) it is incorporated on or after the 1st day of April, 2016 but before the 1st day of April, 2019; Insertion of new section 80-IAC. Special provision in respect of specified business. 

So, now an LLP can also claim 100 % profit exemption u/s 80IAC like others. Do not forget to read other exemption like capital gains under section 54GB. Commendable ,move by government

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