We simplify complex legal and financial challenges by offering a range of services, including Virtual CFO, Legal Support, Tax & Regulatory, Investment Support, and Global Expansion assistance.
Our goal at Treelife, is to provide you with peace of mind and ease in business.
Treelife served as our integrated legal team, they streamlined contract closure and processes, provided expert business advice, and supported our growth journey. Their proactive approach and attention to detail were invaluable in navigating challenges effectively. We highly recommend Treelife to startups aiming for sustainable and efficient growth.
Karan Bajaj
CEO, WhiteHat Jr
Jitesh and Garima helped set up WhiteHat Jr’s legal and financial structures that held from incorporation to fundraising to our acquisition. Their deep understanding of the startup space helped us validate our ideas from a regulatory framework and generated confidence among key stakeholders as we expanded our product in India and abroad.
Arnav Sahni
Cofounder, SPLOOT
Treelife’s support has been outstanding. Their advice is proactive, their turnaround time is impressive, and their industry knowledge is unmatched. They guided us through our ESOP policy implementation and negotiated and closed two equity fundraising transactions with ease. We highly recommend Treelife to any start-up entrepreneurs in need of legal, compliance and financial support for their business.
Chloe Degois
Lead Finance Ops, Partoo
Treelife has been a great help in opening our subsidiary in India. Reactive and very professional, they ensure the good management of this subsidiary. We are very satisfied with the work they are doing.
Pravin Jadhav
Founder, Raise Financial Services
We have engaged with Jitesh and the team at TreeLife on multiple assignments through our journey. TreeLife has been super helpful and have made positive contributions in multiple transactions spanning legal, financial and engagements involving our key acquisitions at Raise. We highly recommend associating with them.
Our Services
For Startups
Virtual CFO
PayrollAccounting & MISBudgetingTax Compliance
Streamline your startup's financial operations with our comprehensive Virtual CFO services. We handle everything from payroll and accounting to budgeting and tax compliance, allowing you to focus on scaling your business.
Shareholders' AgreementTerm Sheet Due Diligence Contract Drafting & Vetting
Navigate the complexities of legal requirements with ease. Our Legal Support services cover shareholders' agreements, term sheets, due diligence, and contract drafting and vetting, ensuring your startup is legally sound.
Stay compliant and organized with our Secretarial Compliance services. We assist with entity incorporation, strike-offs, annual filings, and FEMA compliance, keeping your business operations smooth and hassle-free.
Transfer PricingTax AdvisoryEquity RestructuringFinancial Modeling
Optimize your financial strategy with our expert Tax & Regulatory services. We provide support for transfer pricing, tax advisory, equity restructuring, and financial modeling, ensuring your startup remains compliant and financially efficient.
Efficiently establish your Alternative Investment Fund with our comprehensive setup services. We handle fund setup, PPM, tax structuring, and SEBI applications, ensuring a seamless start.
Due DiligenceTransaction DocumentationCompany Liaisoning
Enhance your investment strategies with expert support in due diligence, transaction documentation, and company liaisoning, facilitating informed and strategic decisions.
Maintain smooth operations and strong investor relations with our lifecycle assistance services, including vendor liaisoning and continuous investor support.
Structure ConceptualisationTax & Regulatory ImpactExecution Support
Transform your business structure seamlessly with our flipping services. We offer structure conceptualization, tax and regulatory impact assessment, and execution support to ensure a smooth transition.
EvaluationSetup AssistancePost-Setup Ongoing Support
Leverage the benefits of GIFT IFSC with our tailored services. We provide evaluation, setup assistance, and post-setup ongoing support to facilitate your entry into this strategic hub.
Jurisdiction EvaluationRegulatory AssessmentExecution Support Ongoing Compliance
Enter the Indian market with ease using our comprehensive India entry services. We assist with market entry strategy, setup assistance, and ongoing back office support to help your business thrive.
Expand your business internationally with confidence. Our global market entry services include jurisdiction evaluation, regulatory assessment, and execution support, ensuring a successful launch in new markets.
The Companies Act, 2013 (the “Act”), has introduced significant changes to the rules governing application monies received by companies through private placement and preferential allotment of shares, aiming at enhanced transparency, protection of investor interests, and ensuring timely utilization of funds.
This article outlines the key provisions and implications of non-compliance regarding the refund of application monies under the Act.
Following the recent budget announcement, which aimed to simplify regulations for Foreign Direct Investment (FDI) and Overseas Investment (ODI), the Department of Economic Affairs has amended the FEMA (Non-debt Instruments) Rules 2019. A significant aspect of this amendment is the introduction of a new provision that enables FDI-ODI swaps. We have curated a slide below to help you understand this better.
FDI & ODI Swap following Budget 2024
𝘖𝘵𝘩𝘦𝘳 𝘢𝘮𝘦𝘯𝘥𝘮𝘦𝘯𝘵𝘴:
1. Investment by OCIs on non-repat basis 𝐞𝐱𝐜𝐥𝐮𝐝𝐞𝐝 from calculation of indirect foreign investment. Earlier only NRI investment was excluded.
2. Aggregate FPI cap of 49% of paid-up capital on a fully diluted basis has now been removed. FPIs now required to 𝐨𝐧𝐥𝐲 𝐜𝐨𝐦𝐩𝐥𝐲 𝐰𝐢𝐭𝐡 𝐬𝐞𝐜𝐭𝐨𝐫𝐚𝐥 𝐨𝐫 𝐬𝐭𝐚𝐭𝐮𝐭𝐨𝐫𝐲 𝐜𝐚𝐩.
3. ‘White Label ATM Operations’ has been recognized as a new sector, with 100% 𝐅𝐃𝐈 𝐧𝐨𝐰 𝐚𝐥𝐥𝐨𝐰𝐞𝐝 𝐮𝐧𝐝𝐞𝐫 𝐭𝐡𝐞 𝐚𝐮𝐭𝐨𝐦𝐚𝐭𝐢𝐜 𝐫𝐨𝐮𝐭𝐞.
Key Indian players in this sector: India1 Payments, Indicash ATM (Tata Communications), Vakrangee, and Hitachi Payments.
4. NR to NR transfer will require prior Govt approval 𝐰𝐡𝐞𝐫𝐞𝐯𝐞𝐫 𝐚𝐩𝐩𝐥𝐢𝐜𝐚𝐛𝐥𝐞. In the erstwhile provisions, it was required only if investment in the specific sector required prior Govt approval.
5. Definitions – Control now defined in Rule 2, and definition of “startup company” has been aligned with “startups” recognised by DPIIT vide notification dated February 19, 2019. Definitions of “control” and “startup company” elsewhere have been deleted.
Streamlining Financial Compliance for a Health-Tech Innovator
Business Overview
A health-tech company operating a digital clinic under the brand name ‘Proactive For Her’, providing a digital platform to offer accessible, personalized, and confidential healthcare solutions for women.
Project Undertaken
Review of accounting records and tax filings on a monthly basis
Compliance assistance for fundraising
How We Helped?
Review of Accounts and Tax Filing:
Treelife conducted a thorough review of the monthly accounting books to ensure accuracy and completeness, helping the company maintain precise financial records.
We ensured GST payments and returns were filed timely and accurately, reducing the risk of non-compliance and potential penalties for the company.
Our team streamlined and regularized tax returns, annual filings, and other statutory compliances according to applicable due dates, ensuring the company met all regulatory requirements promptly.
Fundraising (Compliance Advisor):
Treelife provided compliance advisory services for the company’s fundraising efforts, ensuring that all financial records and compliance requirements were up-to-date.
We assisted with the timely updating of accounting entries and filings, completing requisite regulatory compliances efficiently.
Our involvement ensured a reduction in the turnaround time (TAT) for payments and MIS processing, facilitating smoother financial operations and improved investor confidence.
By leveraging our expertise in financial and compliance advisory, Treelife enabled ‘Proactive For Her’ to maintain accurate financial records, meet all compliance requirements, and support its fundraising activities. Our comprehensive support helped the company focus on its core mission of providing accessible and personalized healthcare solutions while ensuring robust financial and compliance management.
Treelife played a pivotal role in helping an Indian private limited company transition to a US-headquartered structure. By setting up an LLP in India and guiding the investment process under the ODI route, we ensured compliance with FEMA and income-tax regulations. Our strategic approach enabled the company to raise funds from foreign investors and expand globally with minimal tax implications.
Business Overview
Indian individual promoters had established a private limited company in India and sought to expand their business globally. They aimed to raise funds from foreign investors and transition to a US-headquartered structure.
Project Undertaken
Setting up an LLP in India
Investment in a newly incorporated US entity under the ODI route
Acquisition of Indian entity shares by the US entity from the promoters
Structure Mechanics:
Indian individual promoters set up an LLP in India.
The LLP makes investments in a newly incorporated US entity under the ODI route.
The US entity acquires the shares of the Indian entity from the promoters, adhering to FEMA and income-tax regulations.
A benchmarking study is undertaken for all ongoing transactions between the US entity and the Indian entity.
Parameters:
The gift structure used under the erstwhile ODI rules was no longer possible, as Indian resident founders can now receive gifts of shares from their relatives.
Recently revamped ODI rules by RBI do not permit a foreign company to set up an Indian subsidiary where the Indian promoters control such a foreign company.
Any transaction between the offshore company and its Indian subsidiary needs to be benchmarked from a transfer pricing perspective.
Minimal income-tax implications and adherence to FEMA pricing norms.
Facts:
Indian promoters aimed to expand their business globally and raise funds from foreign investors.
They sought to move to a US-headquartered structure to facilitate this expansion.
By strategically structuring the investment and ensuring compliance with the latest ODI rules and FEMA pricing norms, Treelife enabled the company to achieve its global expansion goals. Our financial advisory services provided the necessary support to navigate complex regulatory landscapes and optimize tax implications, ensuring a smooth transition for the company’s international growth.
In just a few weeks, Treelife transformed the financial infrastructure of an innovative SaaS company. We set up efficient accounting systems, ensured seamless bookkeeping, and provided critical fundraising support. Discover how our strategic approach reduced their operational burden and enhanced their financial management.
Business Overview
An innovative insurance-tech company using technology and innovation to transform the traditional insurance model. The company offers a cloud-based platform that connects distributors to the insurance ecosystem.
Project Undertaken
Setting up systems for HR, accounting, and payroll
Ongoing bookkeeping, tax compliance, and payments
Fundraising and due diligence support
How We Helped?
Setting Up:
Treelife took ownership and set up the entire accounting system for the company from inception using Zoho Books and Zoho Payroll.
Assisted in migrating from Zoho Payroll to Keka, ensuring a smooth transition.
Effective implementation of software and processes reduced the time and effort required by the founders.
Bookkeeping and Accounting:
Timely updating of accounting entries and filing, ensuring compliance with regulatory requirements.
Completion of requisite regulatory compliances, reducing TAT for payments and MIS processing.
Fundraising & Vendor Due Diligence:
Represented the company during the due diligence process conducted by investors, assisting them in understanding the business model and transaction workflow.
Submitted data in the requisite formats and seamlessly resolved queries from the diligence team regarding finance and tax-related areas promptly.
By leveraging our expertise in financial management, Treelife significantly improved the company’s operational efficiency and supported its growth journey. Our comprehensive services ensured that the company was well-prepared for investor scrutiny and ongoing financial challenges.
The IFSCA issued a consultation paper yesterday proposing an “informal guidance” framework, summarized below:
𝐖𝐡𝐨 𝐜𝐚𝐧 𝐫𝐞𝐪𝐮𝐞𝐬𝐭:
Existing players in IFSCA
Persons intending to undertake business in IFSC
Others as may be specified
𝐓𝐲𝐩𝐞𝐬 𝐨𝐟 𝐠𝐮𝐢𝐝𝐚𝐧𝐜𝐞:
No-Action Letters: Request IFSCA to indicate whether or not it would take any action if the proposed activity/ business/ transaction is carried out
Interpretive Letters: Request for IFSCA’s interpretation of specific legal provisions
𝐏𝐫𝐨𝐜𝐞𝐬𝐬:
Application fee: USD 1,000
IFSCA aims to respond to requests within 30 days
The consultation paper invites stakeholders / public to submit feedback by September 10, 2024 via email This is a proactive approach by the IFSCA to foster transparency and provide support to entities operating or looking to operate within the IFSC, ensuring that they have the necessary guidance to comply with the evolving regulatory landscape.
We’re thrilled to share the remarkable growth in fund management activities at GIFT-IFSC! Our latest infographic highlights the significant increase in the number of FMEs and funds, investment commitments, and quarterly growth. This impressive surge underscores the expanding scale and acceptance of GIFT-IFSC as a premier fund management hub.
IFSCA has released a Circular prescribing the fees for the newly introduced Book-keeping, Accounting, Taxation, and Financial Crime Compliance Services (BATF) Regulations.
𝐀𝐧𝐧𝐮𝐚𝐥 𝐅𝐞𝐞𝐬 𝐟𝐨𝐫 𝐒𝐞𝐫𝐯𝐢𝐜𝐞 𝐏𝐫𝐨𝐯𝐢𝐝𝐞𝐫𝐬: – Less than 500 employees: $5,000 per activity – 500 to 1,000 employees: $7,500 per activity – More than 1,000 employees: $10,000 per activity
𝐊𝐞𝐲 𝐏𝐨𝐢𝐧𝐭𝐬 𝐟𝐨𝐫 𝐄𝐱𝐢𝐬𝐭𝐢𝐧𝐠 𝐀𝐧𝐜𝐢𝐥𝐥𝐚𝐫𝐲 𝐒𝐞𝐫𝐯𝐢𝐜𝐞 𝐏𝐫𝐨𝐯𝐢𝐝𝐞𝐫𝐬 (𝐀𝐒𝐏𝐬): – Existing ASPs rendering BATF services under the IFSCA ASP Framework are not required to pay the application fee for the same activity under BATF regulations. – Annual/recurring fees will be adjusted for the fees already paid under the ASP framework.
𝐈𝐦𝐩𝐨𝐫𝐭𝐚𝐧𝐭 𝐃𝐚𝐭𝐞: – Existing ASPs must communicate their willingness to operate under the new BATF regulations for bookkeeping, accountancy, and taxation services by August 2, 2024.
The Union Budget 2024 marks a significant milestone in India’s economic journey. This Budget underscores the Government’s commitment to maintaining fiscal prudence while driving substantial investments in critical sectors. Despite global economic challenges, the Indian economy has fared well, maintaining stability and growth. For 2024-25, the fiscal deficit is expected to be 4.9% of GDP, with a target to reduce it below 4.5% next year. Inflation remains low and stable, moving towards the 4 percent target, with core inflation (non-food, non-fuel) at 3.1 percent.
The theme of the Budget focuses particularly on employment, skilling, MSMEs, and the middle class. This budget outlines the roadmap to Viksit Bharat 2047 focusing on nine priority areas to generate ample opportunities for all: productivity and resilience in agriculture, employment and skilling, inclusive human resource development and social justice, manufacturing and services, urban development, energy security, infrastructure, innovation and R&D, and next-generation reforms.
The Budget introduces several pivotal reforms aimed at simplifying tax structures, incentivizing investments, and promoting sustainable growth. The abolition of angel tax, reduction in corporate tax rates for foreign companies, and comprehensive review of the Income-tax Act, 1961 in the coming days are expected to bolster the startup ecosystem and attract international investments.
The subsequent sections of this Budget document provide an in-depth analysis and key highlights related to personal taxation, business reforms, investment opportunities, and developments in GIFT-IFSC. Personal taxation changes include revised income tax slabs, increased deductions, and adjustments in Taxes Collected at Source (TCS) and Taxes Deducted at Source (TDS) regulations. Business reforms cover the abolition of the angel tax, reduction in corporate tax rates for foreign companies, and measures to enhance ease of doing business. Investment opportunities are improved through rationalization of the capital gains tax regime, changes in holding periods and tax rates, and amendments related to buyback taxation and Securities Transaction Tax (STT) rates. GIFT-IFSC developments include tax exemptions for Retail Schemes and Exchange Traded Funds (ETFs), removal of surcharges on specified income, and other measures. These sections provide a comprehensive overview of the Union Budget 2024’s measures to support individuals, businesses, and investors, and to enhance India’s position as an attractive destination for global investment and financial activities.
The Union Budget 2024 is a balanced and forward-looking document, reflecting the Government’s resolve to steer the economy towards sustainable growth, innovation, and inclusiveness. This detailed presentation analysis aims to provide a comprehensive analysis of the Budget’’s key highlights, policy changes, and their implications for various sectors of the economy.
Overview
Key Macroeconomic Indicators from Budget 2024
Key indicators
Budget 2024-25
Budget 2023-24
Total Receipts (other than borrowings)
⬆️INR 32.07 lakh crore
INR 27.2 lakh crore
Net Tax Receipts
⬆️INR 25.83 lakh crore
INR 23.3 lakh crore
Total Expenditure
⬇️INR 48.21 lakh crore
INR 45 lakh crore
Fiscal Deficit (as % of GDP)
⬇️4.9%
5.90%
Gross Market Borrowings
⬇️INR 14.01 lakh crore
INR 15.4 lakh crore
Net Market Borrowings
⬇️INR 11.63 lakh crore
INR 11.8 lakh crore
Notes: 1. Inflation: Low, stable and moving towards the 4 per cent target, 2. Core inflation (non-food, non-fuel): 3.1 per cent
Key Policy Highlights – Budget 2024
1. Employment and Skilling
Provides wage support and incentives for first-time employees and job creation in manufacturing, along with employer reimbursements for EPFO contributions. Expected to benefit 2.1 crore youth, 30 lakh manufacturing jobs, and incentivize 50 lakh employees.
Internships for 1 crore youth in 500 top companies over 5 years, with INR 5,000 monthly allowance along with one-time assistance of INR 6,000. Companies eligible to cover training costs and 10% of internship costs from their CSR funds.
2. MSMEs and Manufacturing
Credit Guarantee and Support: The Credit Guarantee Scheme facilitates term loans for machinery and equipment purchases without collateral, covering up to INR 100 crore per applicant. Additionally, a new mechanism will ensure continued bank credit to MSMEs during stress periods, supported by a Government-promoted fund.
New Assessment Model for MSME Credit: Public sector banks to develop new credit assessment models based on digital footprints rather than traditional asset or turnover criteria.
3. Ease of Doing Business (Tax and Compliance)
Angel Tax Abolished: Abolishment of angel tax for all classes of investors to boost the startup ecosystem and entrepreneurial spirit.
Income Tax Reforms: Comprehensive review of the Income-tax Act, 1961 in the coming days to reduce disputes and litigation.
Variable Capital Company (VCC) Structure: Legislative approval sought for providing an efficient and flexible mode for financing leasing of aircrafts and ships and pooled funds of private equity through a ‘variable company structure’.
Stamp Duty Reduction: Encouraging states to moderate high stamp duty rates and consider further reductions for properties purchased by women.
Foreign Direct Investment (FDI) and Overseas Investment: The rules and regulations for FDI and Overseas Investments will be simplified to facilitate foreign direct investments, nudge prioritization, and promote opportunities for using Indian Rupee as a currency for overseas investments.
4. Space Economy and Technology
A venture capital fund of INR 1,000 crore to expand the space economy by five times in the next decade.
Full exemption of customs duties on 25 critical minerals and reduction on two others to support sectors like space, defense, and high-tech electronics.
5. Services
Development of Digital Public Infrastructure (DPI) applications at population scale for productivity gains, business opportunities, and innovation by the private sector. Planned areas include credit, e-commerce, education, health, law and justice, logistics, MSME services delivery, and urban governance.
An Integrated Technology Platform will be set up to improve the outcomes under the Insolvency and Bankruptcy Code (IBC) for achieving consistency, transparency, timely processing, and better oversight for all stakeholders.
6. Others
Urban Land Related Actions: Land records in urban areas will be digitized with Geographic information system (GIS) mapping. An IT-based system for property record administration, updating, and tax administration will be established. These will also facilitate improving the financial position of urban local bodies.
9 Pillars to Viksit Bharat 2047 and Policy Initiatives
To drive India’s growth and development, the Union Budget 2024 outlines nine strategic pillars that form the foundation for the nation’s economic agenda, aiming towards Viksit Bharat 2047. These pillars encompass key sectors and initiatives aimed at enhancing productivity, fostering innovation, and ensuring inclusive development. Each pillar is supported by targeted policy measures designed to create opportunities, boost investments, and address critical challenges. The following sections detail these pillars and the corresponding policy initiatives.
Decoding Tax in Budget 2024
The subsequent part of this Budget document is broken down into 4 primary sections providing in-depth tax analysis including:
Personal – Individuals including founders, team members, etc.
Investment – Primarily taxation norms around capital gains.
Business – Startups and other businesses.
GIFT-IFSC – Proposed amendments for IFSC units.
These sections provide a comprehensive overview of the Union Budget 2024’s measures to support global investment and financial activities.
I. Personal
Revision of slab rates for individuals under new tax regime
Proposed changes in personal income tax slabs for individuals (highlighted below) resulting in a tax saving of up to INR 17,500 excluding surcharge and cess under new tax regime.
Existing Slabs (INR)
Proposed Slabs (INR)
Tax Rate
0-3,00,000
0-3,00,000
NIL
3,00,001-6,00,000
3,00,001-7,00,000
5%
6,00,001-9,00,000
7,00,001-10,00,000
10%
9,00,001-12,00,000
10,00,001-12,00,000
15%
12,00,001-15,00,000
12,00,001-15,00,000
20%
>15,00,000
>15,00,000
30%
Note : Full tax rebate available for taxable income upto of INR 7,00,000
Treelife Insight:
We have prepared a tax calculator to explore potential tax savings here.
Increase in tax deductions under new tax regime
Standard deduction for salaried employees is proposed to be increased to INR 75,000 from INR 50,000.
Cap of deduction against income from family pension for pensioners increased to INR 25,000 from INR 15,000.
Deduction for employer’s contribution to NPS increased from 10% to 14% even for employees other than Central or State Government employees.
TCS collected from minors
TCS collected from minors can only be claimed as credit by the parent in whose income the minor’s income is clubbed. This amendment is effective from January 1, 2025.
Credit for TCS and all TDS for salaried employees
It is proposed to allow employees to club their TCS and TDS (other than salaries) for the purpose of computing TDS to be deducted from salary.
Treelife Insight:
TCS is usually collected on foreign travel, LRS remittances, purchase of cars beyond a limit. This will help salaried employees effectively manage tax cash flows.
Income classification of rent on residential house
It has been clarified that income from letting out of a residential house to be classified under the heading “Income from house property” and not “business income”.
Increase in limits for applicability of Black Money Act, 2015 for disclosure of foreign income and asset in the Income Tax Return (ITR)
Penal provisions under section 42 and 43 of the Black Money Act, 2015 proposed to not apply in case of non-reporting of foreign assets (other than immoveable property) with value less than INR 20,00,000 (increased from earlier threshold of INR 5,00,000).
Quoting of Aadhaar Enrolment ID in ITRs discontinued
Quoting of Aadhaar Enrolment ID proposed to be no longer allowed in place of Aadhaar number for ITRs filed after October 1, 2024.
II. Investment
1. Rationalization of Capital Gains Tax Regime
Capital gains tax regime is proposed to be rationalized with effect from July 23, 2024 as summarized below:
Rationalization of Holding Period:
Type of Asset
Period to qualify as Long term
All listed securities
12 months
All other assets (including immovable property)
24 months
Change in Tax Rates:
Long term capital assets
Type of Asset
Residents
Non-residents
Current
Proposed
Current
Proposed
Listed equity shares and units of equity oriented mutual fund
10%
12.5%
10%
12.5%
Unlisted equity shares
20%
12.5%
10%
12.5%
Unlisted debentures and bonds
20%
Applicable rates
10%
Applicable rates
Units of REITs & InvITs
10%
12.5%
10%
12.5%
Immovable property
20%
12.5%
20%
12.5%
Notes:
Exemption available under LTCG has been increased to INR 125,000.
No indexation benefit available for LTCG however forex fluctuation benefit available to NR on sale of unlisted shares.
Indexation available for unlisted shares on March 31, 2018 and sold in Offer for Sale (OFS)
Short term capital assets
Type of Asset
Residents
Non-residents
Current
Propose
Current
Proposed
Listed equity shares and units of equity oriented mutual fund
15%
20%
15%
20%
Others
No change – taxable at applicable rates
Treelife Insight:
Mandatory classification of income on sale debentures (including CCDs / NCDs) and bonds as short term capital gains is a big move and could impact the Real Estate investors where such instruments are widely used. It will be interesting to see how such investors will react to this increase in tax rates.
Reduction in tax rates for long term capital gains on unlisted equity shares should give an impetus to PE / VC funds investing in startups as the lower tax rate will ultimately lead to an increase in the IRR for investors.
Reducing the period of holding for immovable properties to 24 months and reducing the long term capital gains tax rate to 12.5% will be looked at positively.
2. Change in taxation of buyback
Currently, buyback distribution tax is levied on the company at ~23% on the distributed income. It is proposed to tax the buyback proceeds in the hands of the shareholders as “dividend income” at applicable tax rates. The cost of acquisition of shares being bought back to be claimed as a capital loss (depending on holding period).
This amendment is proposed to be effective from October 1, 2024
Treelife Insight:
This will deter companies from offering buybacks as there is a significant tax outflow for the shareholders under the proposed regime. Further there could be timing mismatch between the claiming of loss and payment of tax on buyback proceeds resulting in cash outflow for the shareholders.
3. Increase in STT rates
STT rates for futures and options proposed to be increased with effect from to be effective from October 1, 2024:
Current
Proposed
Options
0.0625%
0.1%
Futures
0.0125%
0.02%
III. Business
1. Abolition of Angel Tax
Angel tax i.e. section 56(2)(viib) of the Income-tax Act, 1961 proposed to be abolished with effect from April 01, 2024
Treelife Insight:
This is a big and welcome move for the startup ecosystem which should significantly boost investor confidence, especially foreign investors which were bought under the ambit of angel tax recently
This amendment is prospective in nature and thus, past tax disputes to still continue
Gift tax i.e. section 56(2)(x) for recipient of shares continues to apply
Differential equity pricing structures will now evolve with this relief
It may be interesting to see if investors insist on ‘merchant banker’ valuation reports under section 56 (2) (x) in small equity fundings which materially affect startups.
2. Reduction in corporate tax rate for foreign companies
Tax rates for foreign companies proposed to be reduced from 40% to 35%.
3. Clarification for taxes withheld outside India
It is clarified that taxes withheld outside India are to be included for the purposes of calculating total income.
4. Increase in limit of remuneration to working partners of a firm allowed as deduction
Existing Structure
Allowable Remuneration
Proposed
Allowable Remuneration
on the first INR 3,00,000 of the book profit
or in case of a loss
INR 1,50,000 or at the rate of 90 % of the book profit, whichever is more
on the first INR 6,00,000 of the book profit or in case of a loss
INR 3,00,000 or at the rate of 90 % of the book profit, whichever is more
on the balance of the book-profit
60%
on the balance of the book-profit
60%
5. Miscellaneous
Equalisation levy of 2% proposed to be abolished with effect from August 1, 2024
Vivaad Se Vishwas Scheme proposed to be introduced
Time limit for issue of notice for initiation of re-assessment reduced from maximum 10 years from end of assessment year to 5 years and 3 months from end of assessment year.
Insertion of section 74A , an approach that consolidates the dealing with discrepancies irrespective of fraud and simplifying the procedural aspects under the CGST Act (on recommendations of GST Council) from FY 2024-25 as under
Limitation period stands at 42 months (from the due date of furnishing the annual return for the financial year) for the purpose of issuance of notice (earlier it was 36 months in case of no allegation of fraud or suppression and 60 months in case of allegation of fraud or suppression)
Time period of 12 months for purposes of passing order (beyond 42 months as aforesaid) extendable by 6 months with approval.
6. Clarificatory amendments related to TDS
Section 194-IA (TDS on sale of immovable property) – Proposed to add a proviso to clarify that the threshold limit of INR 50 lakhs is to be checked on the total value of the property and not on amount paid to each individual seller (with effect from October 1, 2024).
Excluding sums paid under section 194J from section 194C (Payments to Contractors) –Earlier, taxpayers used to deduct TDS under section 194C even if the payment was liable to TDS under section 194J because there was no specific mutually exclusive clause while defining the word “work”. It is proposed to amend the definition of “work” under section 194C to specifically exclude any sum referred to in section 194J (with effect from October 1, 2024)
7. Rationalization of TDS/TCS rates
Section
Old rates
Proposed new rates
Section 194D – Payment of insurance commission (in case of resident person other than company)
5%
2%
(with effect from April 1, 2025)
Section 194DA – Payment in respect of life insurance policy
5%
2%
(with effect from October 1, 2024)
Section 194G – Commission etc on sale of lottery tickets
5%
2%
(with effect from October 1, 2024)
Section 194H – Payment of commission or brokerage
5%
2%
(with effect from October 1, 2024)
Section 194-IB – Payment of rent by certain individuals or HUF
5%
2%
(with effect from October 1, 2024)
Section 194M – Payment of certain sums by certain individuals or Hindu undivided family
5%
2%
(with effect from October 1, 2024)
Section 194-O – Payment of certain sums by e-commerce operator to e-commerce participant
1%
0.1%
(with effect from October 1, 2024)
Section 194F – Payments on account of repurchase of units by Mutual Fund or Unit Trust of India
20%
Proposed to be omitted
(with effect from October 1, 2024)
New Section 194T – Payment of salary, remuneration, interest, bonus or commission by partnership firm to partners
NA
10% on various payments made to partners – salary, remuneration, interest, bonus or commission
(with effect from April 1, 2025)
New Section 193 – Interest paid exceeding on Floating Rate Savings (Taxable) Bonds (FRSB) 2020 with effect from October 1, 2024
NA
10% (threshold – exceeding INR 10,000)
(with effect from October 1, 2024)
Section 206(7) – Interest on late payment of TCS
1% per month or part of the month
1.5% per month or part of the month
(with effect from April 1, 2025)
8. Procedural changes related to TDS proposed:
Time limit to file belated TDS/TCS return in order to not-attract penal provisions to be reduced from 1 year to 1 month from the due date of filling of such TDS/TCS returns (Section 271H) – with effect from April 1, 2025.
Provision to include levy of TCS at 1% on Luxury goods of value exceeding INR 10 lakhs. (Section 206C(1F)) List of such luxury goods are yet to be notified. – with effect from January 1, 2025
Exemption from prosecution if the payment of TDS is made before the due date of filing of TDS return as applicable for such TDS payments (Section 276B) – with effect from October 1, 2024
Applications for Lower tax deductions / collection at source can be made in respect of TDS/TCS u/s 194Q and 206C respectively – with effect from October 1, 2024.
Non revision of the TDS / TCS filings post 6 years of the end of the financial year in which the returns are to be filed. – with effect from April 1, 2025.
Fixation of time limit for deeming an assessee in default as under –
6 years from the end of FY in which credit given / payment was made.
2 years from the end of FY in which the correction statement is filed – with effect from April 01, 2025.
Nil / Lower Tax rates for certain class of notified persons (Class of persons yet to be notified) – with effect from October 1, 2024.
IV. GIFT-IFSC
1. Tax exemptions extended to Retail Schemes and ETFs
Proposed to amend the definition of ‘Specified Fund’ under Section 10(4D) to include Retail Schemes and ETFs launched in GIFT-IFSC thereby extending the beneficial tax regime applicable for CAT III AIFs to GIFT-IFSC to Retail Schemes and ETFs
Treelife Insight:
Relevant only for Inbound Funds setup by pooling money from non-resident investors as the condition that units (other than Sponsor / Manager units) to be held by non-resident investors continues to apply.
2. No surcharge on income for Specified Fund
Surcharge rate on interest and dividend income proposed to be removed for Specified Fund set-up in GIFT-IFSC even if setup as other than Trust
3. Section 68 provisions no longer applicable to Venture Capital Funds (VCFs)
Section 68 dealing with unexplained cash credits allows the tax officer to seek an explanation to provide the source of its funds used for making investment / offer loans to companies subject to these provisions. It is proposed to amend the definition of ‘venture capital funds’ to include VCFs in GIFT-IFSC thereby exempting them from questioning by the tax officer under section 68.
4. Finance Companies exempted from complying with ‘Thin capitalisation’ norms
Exemption from ‘Thin Capitalisation’ norms prescribed under section 94B for Bank and NBFCs extended to Finance Companies in GIFT-IFSC
Treelife Insight:
Finance companies in GIFT-IFSC, especially those engaged in treasury functions, lending or borrowing from non-residents should benefit from the removal of the cap on the deduction for interest expenditure, which was previously limited to 30% of EBITDA for that financial year.
5. Exemption on specified income from Core Settlement Fund setup by recognised clearing corporations
Proposed to amend the definition of ‘recognised clearing corporations’ under Section 10(23EE) to include ‘recognised clearing corporations’ setup in GIFT-IFSC, thereby, exempting any specified income of Core Settlement Guarantee Fund, set up by such corporations.
Labour legislations in India find their basis in the Constitution, through the fundamental rights (specifically, the Rights to Equality; to Freedom; and against Exploitation) and the directive principles of state policy (contained in Articles 38, 39, 41, 42, and 43). It is therefore critical for startups to understand that labour laws in India are fundamentally welfare legislations, imposing significant compliance responsibility on employers as a result of a socialist outlook seeking to protect the dignity of human labour.
The labour law framework in India is intricate, often leading to confusion due to the dual roles of the central and state governments. For example, while central laws like the Industrial Employment (Standing Orders) Act, 1946, dictate terms of employment, state-specific Shops and Establishments Acts also prescribe similar conditions but with variations, necessitating detailed assessments to determine applicable compliances.
Moreover, the enforcement of many central laws is managed by state authorities, leading to inconsistencies in application across different states. For instance, the enforcement of the Payment of Gratuity Act, 1972 varies by state, leading to discrepancies in legal compliance across regions. For example, in Karnataka, Telangana, and Andhra Pradesh, specific gratuity requirements are mandatory, but not in other states.
The landscape’s complexity is exacerbated by the legal definitions of terms like “workman” and “employee” (often used interchangeably in common parlance) which differ significantly across laws and affect the applicability of protections and remedies. For instance, where the Minimum Wages Act, 1948 specifically identifies employment which would be protected by the provisions of the act, the Industrial Disputes Act, 1947 prescribes exclusionary criteria to identify persons who cannot seek remedy from the labour courts under the act.
To address these structural issues, the Government of India has proposed a complete overhaul of the labour laws in India. The proposed Labour Codes are the product of a long drawn process initiated around 2016, and aiming to simplify and reduce ambiguities in law enforcement across states, making it easier for startups to understand and comply with labour regulations, thereby fostering a more straightforward regulatory environment conducive to business operations and growth.
India’s Space Technology Sector: An Industry Overview
The Indian space sector is currently undergoing a significant transformation, driven by increased private sector participation and substantial government support. With over 523 private companies and research institutions now actively contributing, India’s space economy is projected to reach $44 billion by 2033, capturing nearly 10% of the global market. This manual aims to provide comprehensive insights into the industry overview, investment landscape, legal considerations, tax incentives, and intellectual property rights essential for stakeholders in the space tech ecosystem.
Government Initiatives and Investment Landscape
The government has allocated nearly $1.6 billion for the Department of Space (DoS), which oversees the Indian Space Research Organisation (ISRO) and other space-related activities. Since 2014, there has been a notable increase in private investments, particularly in satellite manufacturing and launch services, amounting to $233 million across more than 30 deals by July 2023.
Key Participants and Activities
The Indian spacetech ecosystem comprises a mix of public and private entities working collaboratively to advance the country’s space capabilities. Key activities include:
Satellite manufacturing
Launch services
Space research
Space-based applications
Space exploration
Space debris management
Commercial spaceflight
Development of space law and policy
Regulatory Framework
India’s space sector operates under a comprehensive legal and regulatory framework designed to promote innovation and facilitate private sector participation.
Mapping India’s Spacetech Industry & Regulatory Landscape: A Launchpad for Innovation and Growth
Key regulatory bodies and agencies include:
Department of Space (DoS)
Indian Space Research Organisation (ISRO)
Indian National Space Promotion and Authorization Center (IN-SPACe)
NewSpace India Limited (NSIL)
Antrix Corporation Limited (ACL)
Foreign Direct Investment (FDI) Policy
The existing FDI policy allows up to 100% foreign investment in satellite establishment and operation through the government route. Proposed amendments aim to further liberalize the sector, but gaps and ambiguities remain, particularly regarding compliance with sectoral guidelines and definitions of key terms.
Tax Incentives and Government Schemes
To encourage private participation, several tax measures have been implemented, including GST exemptions for satellite launch services and income tax exemptions for R&D expenditures. Key government schemes supporting the sector include:
Startup India Seed Fund Scheme
Technology Development Fund under DRDO
iDEX (Innovations for Defence Excellence)
Atal Innovation Mission (AIM)
GIFT City IFSC: A Gateway to Global Markets
GIFT City (Gujarat International Finance Tec-City) provides a favorable regulatory environment, cutting-edge infrastructure, and a robust ecosystem for space tech companies. It facilitates funding, international collaboration, and regulatory support, making it an ideal gateway for scaling operations and innovation.
Anticipated Developments
The Indian space tech sector is poised for significant growth, driven by increased FDI, public-private partnerships, advanced technologies, and upcoming incentives. The development of reusable launch vehicles and the Gaganyaan mission, slated for 2025, are set to showcase India’s capabilities and bolster its position in the global space community.
Conclusion
India’s space technology sector is at a pivotal moment, characterized by unprecedented growth, innovation, and collaboration. This report serves as a comprehensive guide for industry players, investors, policymakers, and legal professionals navigating the landscape of India’s space tech ecosystem. The combined efforts of public and private entities are driving the sector’s ascent, positioning India as a major player in the global space economy.
Treelife provides comprehensive legal, financial, and compliance services tailored to the needs of startups, investors, and businesses. Our services include Virtual CFO, legal support, secretarial compliance, tax and regulatory advisory, and assistance with global market entry.
Can Treelife assist with setting up a business in India?
Yes, Treelife provides end-to-end support for setting up a business in India. Our services include market entry strategy, company registration, regulatory compliance, and ongoing back office support to ensure a smooth and successful setup.
What is your experience of working with investors and AIFs?
Treelife has a robust track record of working with investors and Alternative Investment Funds (AIFs). We offer comprehensive support for fund setup, tax structuring, SEBI applications, due diligence, and ongoing compliance, ensuring smooth operations and successful investments.
How is your pricing model?
Treelife offers a flexible and transparent pricing model tailored to the specific needs of your business. Our pricing is structured based on the scope and complexity of the services required and works on the following basis: project-based, where there is a one-time fee; retainer, with ongoing services for a fixed monthly fee; hourly, based on the number of hours worked; and an equity sharing model, where payment is made through a share of equity in your business. This approach ensures you receive the best value for your investment.
Are there any hidden fees or additional costs?
No, Treelife believes in transparency and ensures there are no hidden fees or unexpected charges. All costs are clearly outlined in our engagement proposal, and any additional expenses will be discussed and approved by you before being incurred.
Can Treelife assist with setting up a business in India?
Yes, Treelife provides end-to-end support for setting up a business in India. Our services include market entry strategy, company registration, regulatory compliance, and ongoing back office support to ensure a smooth and successful setup.
Can Treelife assist with international market entry?
Yes, Treelife offers extensive support for businesses looking to expand globally. Our services include jurisdiction evaluation, regulatory assessment, and execution support for market entry, ensuring compliance and smooth operations in new markets.
Do you help in raising funds?
Yes, Treelife assists startups and businesses in raising funds. We provide comprehensive support, including preparation of investor-ready documents, due diligence, financial modeling, and strategic advisory to help you secure the necessary funding.
What is transaction services?
Our transaction services encompass advisory and documentation support for various financial transactions, including private equity/venture capital (PE/VC) deals, mergers and acquisitions (M&A), and venture debt. We ensure smooth and compliant transactions, from due diligence to closure.
I am just a startup, I need all services, can you help me?
Absolutely! Treelife specializes in supporting startups with a wide range of services. From legal support and virtual CFO services to secretarial compliance and tax advisory, we provide end-to-end solutions to help your startup grow and succeed.
What does Treelife do?
Treelife provides comprehensive legal, financial, and compliance services tailored to the needs of startups, investors, and businesses. Our services include Virtual CFO, legal support, secretarial compliance, tax and regulatory advisory, and assistance with global market entry.
What is your experience of working with investors and AIFs?
Treelife has a robust track record of working with investors and Alternative Investment Funds (AIFs). We offer comprehensive support for fund setup, tax structuring, SEBI applications, due diligence, and ongoing compliance, ensuring smooth operations and successful investments.
What is the profile of the members working at Treelife?
Our team at Treelife comprises experienced professionals with diverse backgrounds in finance, law, compliance, and business advisory. Each member brings specialized knowledge and practical expertise to help our clients navigate complex legal and financial landscapes.
Have you worked with startups before?
Yes, we have extensive experience working with startups across various industries. We understand the unique challenges faced by startups and provide tailored solutions to support their growth, from incorporation to fundraising and beyond.
What sets Treelife apart from other service providers?
Treelife stands out due to our integrated approach, combining legal, financial, and compliance expertise under one roof. Our personalized service and deep domain expertise of the Indian market ensure that we deliver solutions that are both strategic and practical.
How do you ensure data security and confidentiality?
Treelife prioritizes the security and confidentiality of your data. We use secure servers, encryption, and access controls to protect your information. Additionally, our team adheres to strict confidentiality agreements and industry best practices to safeguard your data.
Do I need to physically sign any documents?
No, physical signatures are generally not required. Treelife uses secure electronic signature platforms to facilitate the signing of documents, making the process quick and convenient for our clients. However, if physical signatures are necessary, we will coordinate the process with you.
Who will manage my account?
Your account will be managed by a dedicated SPOC who will be your primary point of contact. This person will coordinate with our team of experts to ensure all your needs are met and provide regular updates on the progress of your projects.
What tools or technologies are you equipped with?
Treelife is equipped with a comprehensive technology stack to ensure effective and efficent way to deliver our services. For bookkeeping, we use Tally, QuickBooks, Zoho, and Xero. Our data management is handled through Slack, Dropbox, and Google Drive. For payment processing, we utilize platforms like Kodo, Razorpay, Keka, and PayPal.These tools enable us to provide high-quality, reliable services tailored to your business needs.
I am based out of a location where Treelife doesn’t have an office, how do we work?
Treelife operates seamlessly with clients across various locations whether domestic or international through virtual communication and collaboration tools. We conduct meetings via video calls, share documents electronically, and stay in constant touch through emails and messaging platforms to ensure smooth operations regardless of your location.
How is your pricing model?
Treelife offers a flexible and transparent pricing model tailored to the specific needs of your business. Our pricing is structured based on the scope and complexity of the services required and works on the following basis: project-based, where there is a one-time fee; retainer, with ongoing services for a fixed monthly fee; hourly, based on the number of hours worked; and an equity sharing model, where payment is made through a share of equity in your business. This approach ensures you receive the best value for your investment.
Are there any hidden fees or additional costs?
No, Treelife believes in transparency and ensures there are no hidden fees or unexpected charges. All costs are clearly outlined in our engagement proposal, and any additional expenses will be discussed and approved by you before being incurred.
What is the typical turnaround time for your services?
The turnaround time for our services depends on the complexity and scope of the project. During the initial consultation, we provide an estimated timeline based on your specific needs and ensure timely delivery through efficient project management.
What is your payment schedule?
Our payment schedule is designed to be convenient and flexible. Typically, we operate on a milestone-based payment system, where payments are made at key stages of the project. We also offer customized payment plans based on your specific requirements.
How can I pay you?
Treelife accepts various payment methods to ensure ease and convenience for our clients. You can pay us via bank transfer, credit card, or other electronic payment methods. Detailed payment instructions will be provided upon engagement.