Union finance minister Nirmala Sitharaman has reduced the surcharge on long-term capital gains arising from the transfer of unlisted shares to 15 per cent. This will benefit start-ups.
Currently, the long-term capital gains on listed equity shares and units among others are subject to a surcharge of up to 15 per cent. However, in the case of other instruments suc as unlisted equity shares, they are subject to a graded surcharge of up to 37 per cent. This has now been brought on par with listed equity shares.
“I propose to cap the surcharge on long-term capital gains arising on transfer of any type of assets at 15 per cent. This step will give a boost to the start-up community and along with my proposal on extending tax benefits to manufacturing companies and start-ups reaffirms our commitment to Atma Nirbhar Bharat,’’ Sitharaman said in her budget speech.
Industry circles welcomed the proposal. Sandeep Jethwani, co-founder, dezerv — a wealth tech & wealth management company — said that budget 2022 had taken away one big challenge investors in start-ups and unlisted companies face — that of a higher surcharge.
He pointed out that the reduction of 22 per cent on surcharge would effectively mean a saving of around 4-5 per cent on the long- term capital gains made from these investments. “This is a welcome move that hopefully will boost investments in unlisted securities,’’ Jethwani noted.
K.T. Chandy, partner and leader— private tax, EY India added that the tax related sops would go a long way in boosting capital formation and kicking off a virtuous cycle for growth in the start-up ecosystem.
According to a recent report from Nasscom and Zinnov, more than 2,250 start-ups were added in 2021.