Certain tax changes were announced today, as part of the annual Budget exercise by the Ministry of Finance. Some of the relevant changes for the international business community are as follows:
1. Crypto Assets
Reporting entities will need to disclose transactions relating to crypto assets. Further, the definition of a virtual digital asset will now include any crypto asset being a digital representation of value that relies on a cryptographically secured distributed ledger or a similar technology to validate and secure transactions.
2. Tax Holidays for Start-Ups
Eligible start-ups incorporated up to 2030 will now be entitled to a 100% tax holiday.
3. Boost to Fund Management Activity
Fund managers located in an International Financial Service Centre (“IFSC”) in India and managing Investment Funds were granted flexibility from certain adverse tax consequences, provided that the corpus of the Investment Fund did not constitute investments from Indian residents beyond 5%. Now, this flexibility has been extended to all eligible fund managers, whether or not they are located in an IFSC. Further, funds commencing operations even post 2024 and up to 2030 can avail of other benefits available to funds located in an IFSC.
