Budget 2023: A mixed bag for startup India


Soham Das

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Soham Das

4 reads

While much has been made of the recent changes to India’s income tax slabs and the government’s decision to up its spending, many smaller decisions—from P-Notes to taxing cross-border transactions—which could have an outsized effect on India’s entrepreneurial ecosystem have flown under the radar.

February 03, 2023


Budgets that precede an election year are usually juiced to the gills with populism. Social spending, infrastructure, tax cuts, rural schemes, agri sops, you name it. This year broke from that tradition—trading populism for expansionism. The government’s decision to significantly increase capital outlay, for instance, should spur economic growth in various focus sectors.

In all of this, however, the government’s relentless push to tax every economic transaction is receiving little attention. Whether it is a good thing, meant to help shore up finances, or an extractive philosophy is still unknown. The first casualties, though, are likely to be the startup and entrepreneurial ecosystem.

Plugging the residential property-shaped hole

When an entrepreneur finds themselves in the enviable position of being acquired for a handsome sum, their first move is usually to purchase an expensive, swanky residential property. So much so that Bengaluru—inarguably the startup capital of the country—has an area that’s commonly referred to as ‘Billionaire Street’. 

Section 54F of the Income Tax Act of 1961 allowed an entrepreneur to park profits gained from selling a business in the residential property market, reducing their taxable income in the process.

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