New Delhi: The ministry of communications and information technology has proposed tax exemptions on stock options given to employees by startups, on capital gains that are invested in new ventures and those made from investing in new firms. The moves could have a catalytic effect on such companies in the event the measures are adopted.

The proposals have been sent to the finance ministry as part of suggestions for next year's Budget and are aimed at promoting the startup ecosystem, in line with the initiative that PM Narendra Modi announced in his Independence Day speech.

Some "70-80% of startups in the country are tech-related and we need to find a way to encourage private capital and long-term investment in Indian tech startups", said an official.

The department of IT, which is part of the ministry, has also proposed that such exemptions on employee stock options (Esops) be extended to directors as well. 

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