 "8 things that start-ups expect from Budget 2016")
Prime Minister Narendra Modi’s most visible campaign to boost jobs and investments has been his Start-up India and Stand-Up India plan, to encourage entrepreneurs to start new firms that disrupt traditional businesses, generate jobs and build the economy. Start-up entrepreneurs expect Finance Minister Arun Jaitley to mirror the sentiment of Modi in his Budget presentation on Monday, which would help start-ups thrive and give a leg up to the economy.
Here are eight expectations from startups in Budget 2016
1) Simplify rules and taxes to ensure startup exodus to Singapore and US stops
In 2015, it is estimated 75 per cent of new age startups raising money are domiciled outside of India, either in Singapore and the US, up from 54 per cent in 2014. The government had assured iSPIRT, the lobby group of home grown software product firms that 60 per cent of the 36 points checklist would be implemented. Jaitley’s budget presentation would really show whether the government follows up on its promise. For the record, iSPIRT wants its entire Stay in India checklist to be implemented to prevent exodus of startups
2) Implement GST
The world is looking at where India is headed with the implementation of goods and services tax (GST), which would make the country an unified market. Startups too are eager to know from the Budget announcement when this landmark move would be implemented.
"GST is yet to be passed, we hope that this tax system will be introduced at the earliest as this would reduce the cost of inter-state movement of goods, and ease the documentation requirement for small merchants. As an e-commerce company we are expecting easy taxation across states. For example Delhi has introduced DVAT for e commerce companies as a compulsion. This creates a lot of problems, especially for start-ups. We are looking forward to a positive response from this union budget for start-ups and emerging entrepreneurs," said Saahil Goel, co-founder & CEO of Kraftly.
3) Is service tax part of the three year tax holiday for start-ups?
Modi had announced three year income tax moratorium on start-ups profits for three years. Will this be extended to service tax too?
“Policies and regulatory measures that provide ease of doing business are very important. It remains to be seen whether tax holiday will be extended to service tax and ease of filing tax returns as well. Verdict on implementation of GST will be a game changer,” says Rahul Agrawal, co-founder and CEO of Mebelkart.
4) Innovation in financial technology space, NBFCs parity with banks
“We hope that the budget will lay the groundwork to create more opportunities for innovation in the start-up sector especially in the Fintech space. We expect this Budget to bring parity between the NBFCs and other financial institutions and kick-start the SARFAESI measures, which has been the long standing demand of the NBFCs thereby bringing the regulatory framework in parity with banks,” said Sashank Rishyasringa and Gaurav Hinduja, co-founders of Capital Float.
5) Encourage homegrown innovation in medical equipment, diagnostics and reduce imports
Affordable healthcare is possible if we make in India, for the 1.2 billion people, what we need. To achieve this, the “make in India” policy should make necessary structural and fiscal changes to enable Indian Medical Device and IVD Industry to compete with well-entrenched MNCs in the Indian Market which is worth billions of Dollars, says Dr. GSK Velu, Founder and Managing Director Trivitron Group of companies. Make manufacturing attractive by bringing the different customs code numbers into one category, he says.
6) Rationalise capital gains tax for start-up investors, align with tax regime of investments in listed companies
"Currently, start-up investors pay a much higher tax on capital gains while taking a higher risk compared to publicly traded firms. We expect that capital gains tax for alternative investment funds and angel investors will be aligned to the current tax regime for investments made in listed shares," Indian Angel Network President Padmaja Ruparel said
7) Show roadmap for incubators planned by the government
The government's aim to set up 35 new incubators in existing institutions and further 35 new private sector incubators with government funding support is welcome. I believe that the budget should announce the roll out for this as it plays a pivotal role for startups to find their feet, Anuj Srivastava, CEO and Co-founder of Livspace
8) Clarity on taxation on Angel investments needed for start-ups
"We are still waiting for clarity in angel tax which would foster the startup-ecosystem in India. Removal of policy regulations such as reliance on self-certification instead of audits, tax exemptions for startups as suggested by Nasscom would be of great help for entrepreneurs to dedicate their time towards innovation," says Ambarish Gupta, CEO and Founder, Knowlarity Communications (EOM)