
The 2025 Union Budget brought a wave of changes and renewed focus on fostering innovation and growth within India’s startup ecosystem. Finance Minister Nirmala Sitharaman announced key measures aimed at promoting entrepreneurship and improving access to capital for emerging businesses.
One of the significant announcements was the extension of tax benefits for startups under Section 80-IAC of the Income Tax Act. Startups incorporated until April 1, 2030, can now avail themselves of these benefits, provided they meet eligibility criteria.
“We continue to support the Indian startup ecosystem. I propose to extend the period of incorporation by 5 years to allow the benefit available to startups which are incorporated before April 1, 2030,” the finance minister noted during her budget speech.
Previously, only startups incorporated between April 1, 2016, and March 31, 2024, were eligible for tax benefits under the Startup India programme. While the 2024 budget had extended this deadline to March 2025, the latest extension further pushes it to March 31, 2030.
These benefits include a three-year tax holiday, exemption from long-term capital gains tax, and exemption from tax on specific investments. Startups must be recognised by the Department for Promotion of Industry and Internal Trade (DPIIT) and meet turnover criteria, among other conditions, to qualify.
Startup founders and industry veterans have differences of opinions in this new Budget announcement. Some are happy with what is happening in the industry, while some are still not satisfied as they had expected more.
“We were eagerly waiting for the patient capital fund for the deeptechs. Since there are so many revolutionary changes in AI and deep tech, such a fund is crucial. It was disappointing that instead of general mentioning, no specific announcements were made on that sector. However, the major infrastructural projects like the emerging technology hub, women, SC/ST entrepreneurs' loans, PPE fund are a welcome move.”
Anoop Ambika, CEO, Kerala Startup Mission
Beyond tax benefits, the budget also introduced measures to improve access to domestic capital. The government allocated an additional Rs 10,000 crore to the Small Industries Development Bank of India’s (SIDBI) Fund of Funds for Startups (FFS). This move is expected to channel more financial support to promising ventures
"The introduction of a credit guarantee will help startups achieve a balanced mix of equity and debt funding, making their growth more sustainable."
Sridhar Parthasarathy, co-founder & general partner, Bluehill.VC
The government also highlighted the role of Artificial Intelligence in India’s future innovation landscape.
"The expansion of broadband access and educational initiatives such as 'Train the Trainers' are also expected to benefit students in tier 3 and tier 4 cities, broadening the talent pool for tech-driven industries.
Pankit Desai, co-founder & CEO, Sequretek
Additionally, the Credit Guarantee Scheme for Startups, established in 2016, continues to provide guarantees for loans extended to DPIIT-recognised startups by banks, NBFCs, and SEBI-registered venture debt funds.
The Startup India Seed Fund Scheme (SISFS) launched in 2021 with an outlay of Rs 945 crore also remains instrumental in supporting proof of concept, prototype development, and commercialisation.
“Our ask was a better credit platform and framework for startups, and to that extent, the new Budget reform is a welcome step. This will allow them to grow and build sustainable businesses and not be dependent on just equity infusion.”
Ankur Mittal, co-founder, Inflection Point Ventures