The start-up community had been waiting with bated breath to receive some relief from the taxing of employee stock ownership plans (ESOPs). It was widely accepted that the tax on ESOPs should be deducted only at the time of sale rather than the shares vested. Thus, the government’s decision to defer taxing on ESOPs for 5 years comes as a welcome development for start-ups across the country.
FM Nirmala Sitharaman also announced an increase in the period for start-ups to claim tax deductions for accumulated losses from 7 to 10 years. This will allow start-ups to take more risks, innovate on a larger scale and contribute to the economy in a much more significant manner.
(The author is Executive Director at TiE Delhi-NCR)
Published 01 February 2020, 13:13 IST