Mumbai: The Parliamentary Committee has issued a recommendation to increase investment in startups. According to recommendations, Long Term Capital Gains tax( LTCG) should be abolished for two years.
This will benefit startups in long run. It will also help increase investment in this corona crisis.
Long term capital gains tax is basically tax on long term capital gains. When a startup make a profit by selling any movable and immovable property, then that profit is called capital gains. If the property is sell after a certain period, then it is called long term capital gains. For long-term capital gains, these fixed periods vary.
However, long term is fixed in terms of property. For example, if the shares are sold after one year, the profits will be long term capital gains, while the bonds will be eligible for long term capital gains only if sold after three years. It may vary from 1 to 3 years.
Startups are basically company that has been registered in India within the last 5 years and its turnover has not exceeded 25 crores in any financial year. This company deals with innovation, development, deployment and new products.