Supporting Start-ups - Finance (No. 2) Bill, 2019

India has grown as a hub for start-up ventures in the last few years. Government initiatives have incentivized the functioning of start-up companies and have made a largely positive impact on the prospects for entrepreneurship in India. The Finance (No. 2) Bill, 2019 ("Bill"), incentivises fundraising for new-age start-ups and facilitates acquisitions.

1. Start-ups – Rationalisation Measures.
2. Limitations imposed on carry forward of loss.
3. Changes to Alternative Investment Funds (AIF) – Pass Through.
4. Buy-back tax on listed securities.

I. Start-ups – Rationalisation Measures

The law as it stands states that a start-up company can apply for income tax exemption on investments above the fair market value (FMV) received under section 56 of the Income Tax Act, 1961 (the Act). A start-up shall be eligible for notification under clause (ii) of the proviso to Section 56 (2)(viib) of the Act, and consequent exemption from the provisions of that clause, if