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Taxation: Every Women Entrepreneur Should Know

by Isha Katiyar
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Taxation Every Woman Entrepreneur Should Know | Womopreneur


Income tax return refers to the tax department about the actual income and tax benefit of a person that it tenders to pay to the government. Income tax is entitled to a person to pay on the earned income. Even though, according to the income tax act of India tax exemptions are available on various parameters such as home loan, education loan, and many more. However, many of the entrepreneurs do not perceive such issuance. In this article, we will get to know about the tax benefits that every women entrepreneur must know about.  

Tax benefit that every women entrepreneur need to know

Tax exemptions save people to pay taxes as well as incentivize them to fund more for future aspects. Although, we are living in such a time when people with creative endeavors want to establish their business and keep looking for ingenious and immaculate ways to save their taxes. Consequently, we will discuss here some crucial points to keep in mind while filing income tax returns.

Income category

According to the Indian taxation system, the income tax payment can be categorized into three sections:

  • People who earn 2.5 to 5 lakh annual income shall be liable for paying 5% of income tax.
  • People with 5 to 10 lakh annual income shall be liable for paying 20% of income tax.
  • People whose annual income is more than 10 lakhs will be liable for paying 30% income tax.

Mention all your income sources

Mention all your income sources even if they are additional and interest incomes since they portray a clear picture of the person as a responsible citizen. Also, it helps to get a clear picture of GDP.

Common tax benefits for female entrepreneurs

  • Funds of Funds

To give a financial boost in the initial stages of the startups, the government of India has decided to provide mandatory financial aid for setting up a fund with an initial corpus of 2,500 crore and a total corpus of 10,000 crores for four years. All this funding custody relies upon the head of Funds of Funds (FOF) which will be directly invested but under the direction of SEBI.

  • Complete tax exemption in the first three years

According to the legislation and income tax act of India, every business which involves development, invention, commercialization of new products, technology, and services that come under the intellectual property is given a complete exemption for the initial three years. The government has decided to fund-of-funds to boost up entrepreneurial ventures for the first three years of startups. It was proclaimed in the Budget session in the Parliament, that new startups and business firms will not sustain any taxes except minimum alternate tax on profit experienced in the initial three years of startups.

  • Exemption in capital gain tax

Latterly, the government of India has also made provisions for a 20% exemption on the capital gain tax. Capital gain tax includes capital assets such as bonds, stocks, etc. It is observed that most of the Indian investments in startups and businesses were made by Mauritius. However, capital gain tax on investments and startups from there waived just before the national tax provisions are made.

  • Other tax adjustments that must be known to boost up startups

There are some tax adjustments and fund allocations that are made in the tax exemption field to boost up the startups and business firms:

  • Special provision set up to support entrepreneurs who belong to Scheduled Caste and Scheduled Tribes. 
  • Fund allocation of about 500 crores to women and SC/ST through Startup India program to promote startups and businesses by new entrepreneurs. 
  • Deducing long term capital gains for unregistered or unlisted business startups from two to three years.
  • To amend the Motor Vehicle Act to get access to entrepreneurship chances in the road transport sector.
  • Employees’ Provident Fund provision for the initial three years of the startups.
  • Increment in eligibility criteria for the tentative tax scheme for small startups and businesses through allowing startups with turnover up to 2 crores which were earlier limited to only 1 crore in order to get tax exemptions.
  • Providing ease to upcoming entrepreneurs who are living in rented houses away from their native places due to consequences of the area on the startups by increasing the 80GG deduction from 24,000 to 60,000.
  • Alternation in service tax

Amendment in tax services influences entrepreneurs involving services such as Deen Dayal Upadhyay Grameen Kaushalya Yojana and also some foreign accessing bodies through the Ministry of Skill Development and Entrepreneurship. Moreover, the rate of service tax has been increased up to 15% through the Krishi Kalyan Cess with an approximate value of 0.5%.

Despite the lack of transparency of goods and services for online downloads has been kept out of taxes for the foreign entities consequently they continue to sell their products and services by several online sources without paying any tax benefits and service tax.

  • EPF payment through government 

EPF is an abbreviation of the Employee’ Provident Fund and is paid 8.33% of this by the government to the newer employees for the first three years. Previously, the employees had to pay 12% of their basic salary as EPF. This will soothe various employers’ costs cutting up to 12% for the initial three years. Moreover, this will also provide them with opportunities to hire adroit employees for their company since candidates have job securities.

  • Presumptive taxation scheme

While an entrepreneur has acquired to maintain account books a person can relieve from managing books of account by adopting presumptive taxation schemes if the income-earning rate is 8%. On condition that the earning rate is greater than 8% then the higher rate can be proposed. This scheme is applicable for small startups and businesses with a turnover of up to 2 crores and also for those professionals whose gross income is up to 50 lakh.


Indian supervisors and regulators find that the very possible way to aid entrepreneurs is helping them to allocate funds and relieve them in taxation schemes. However, some of the demands are fulfilled while others are left such as environmental attention, eligibility criteria scheme amendment for fund allocation, the interaction of young entrepreneurs with international investors.

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