 "Budget 2016: Looking out for the start-up community")
With the buzz following the introduction of the ‘Start-Up, Stand Up India’ and ‘Make in India’ initiatives and the promises made by the government to ensure a start-up friendly environment, the entrepreneurial community brimmed with anticipation regarding the budget.
Even with the mixed opinions and feelings about the government meeting the entrepreneur’s budget expectations, there are some positives that are bound to make a much needed impact in the industry.
India is a young nation, both in terms of its population structure as well as economic maturity. Despite challenges of a growing population, widespread poverty & illiteracy and deteriorating global markets, it has been a force to be reckoned with in world economy in recent times. But one has conceded that to ensure sustainable growth and development, there is a serious need to accelerate entrepreneurship in this nation in order to facilitate job creation and enforce economic stability.
It is, hence, necessary to include the government’s vision for entrepreneurs as an integral point of contention while analysing the budget, as much as its revelation for farmers and the rural populace.
Boost to budding entrepreneurs
The Finance Minister truly scripted a path for new beginnings through tax incentives, to not only first time house buyers within the Rs 50 lakh range, but also new start-up businesses.
Tax exemption on secured profit to the tune of a full hundred percent, except for MAT (moving annual total), for three years to up-and-coming start-ups is just the boost that these businesses need in order to survive and persevere in this competitive market. This is a welcome move by the government and can surely change the face of employment in India by encouraging entrepreneurship.
At the same time, the government has emphasised on ‘ease of doing business’ in India, a crucial factor in gaining momentum in international as well as domestic trade. By relaxing registration norms and saving time and cost for start-ups to get licensed as a company, the government has ensured some of the elusive ease of doing business, at least for the entrepreneurs.
Moreover, the corporate income tax rate for companies with a turnover of less than Rs 5 crore has been lowered to 25 per cent, a policy which will benefit many entrepreneurial firms.
Promoting Digital India
Neeraj Mittal, Jt MD, Bonita India
By making the dissemination of digital literacy in rural areas one of their goals, the government has opened up a myriad of opportunities for start-ups. With the additional advantage of the implementation of Aadhar smart card system in rural India, the scope for paperless, cashless transactions between start-ups and rural consumers and sellers, and e-commerce market growth has widened.
Another exciting observation is that the lower rate of taxation in royalty income from patents may encourage software start-ups to innovate and concentrate on invention of digital technology and grab intellectual property rights for the same. However, the conspicuous omission of tax relaxation in software companies, especially considering the foreign competition, is seen as a blow to many entrepreneurs.
More for the road ahead
While the road has been paved for a boom in start-ups and budding entrepreneurs, almost literally with the infrastructural development mentioned in the budget, there is a lot left to be desired. Most of the promises that were made to the entrepreneurial public have been fulfilled. But there is a bit of disappointment in certain quarters as not a lot of new policies and dimensions to support the vision for entrepreneurs, have been introduced since the early initiatives.
Entrepreneurs have demanded more tax reforms and policies to promote ease of doing business and sustainability of an enterprise, including the ambiguity regarding TDS; and expansion of FDI in most sectors like retail and food products has dampened spirits of small and medium businesses.
The budget may have pushed the industry towards the right direction, but it may need a shove in a future.
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Neeraj Mittal is the joint managing director of Bonita India
