The government is expected to provide tax incentives to startups in the forthcoming Budget to support the growth of budding entrepreneurs, sources said. The Department for Promotion of Industry and Internal Trade (DPIIT) has suggested several measures to the finance ministry for startups in the Budget, according to a PTI report. The recommendations include an extension of tax incentives to incubators supported under Atal Innovation Mission; reduction in GST (Goods and Services Tax) rates on AIF (alternate investment fund) management fees; and tax benefits on ESOPs, they said.
Here’s a Budget wishlist from startup entrepreneurs
Bhavin Turakhia, Founder & CEO, Flock, corporate communication platform
The two important sectors that should be an area of focus in the coming Union Budget is technology and startups. We would like the government to bring in measures to ease the compliance and filings guidelines for startups and eradicate the current penal provisions. Also, with technological disruption being a catalyst for the growth of startups today, we expect the government to make significant investments in technology hubs that will help strengthen emerging technologies such as artificial intelligence, machine learning, internet of things etc. As India is witnessing this boom in digital technology adoption, it has put us on the global map and we need to ensure that we take the relevant steps to ensure that our country is at the center of the fourth industrial revolution.
Tanuj Choudhry, Chief Business Officer, HomeLane, Bangalore-based startup
Owning a home is a basic human need and not a luxury. Home interiors is an essential part of owning a home, and therefore it is integral to consider home interiors at 12 percent GST slab instead of 18 percent. This will help in boosting demand alongside the much-anticipated change in income tax slabs. There needs to be more liquidity for homeowners to be able to spend more since personal income tax rates alone will not aid affordability for the consumer.
Another major cause for worry is the higher import duties imposed on paper and other input materials. This is mainly a concern for the home design and décor segment since paper is crucial for making products like laminates. If we want to have a ‘Make-in-India’ stamp, then the costs of getting quality material should be contained. While there is a need to revive our economy, import duties on many needs to be re-considered.
Vishal Saurav, Founder and CEO of Xboom Utilities
With the rising numbers of crime against women, addressing the issue of women’s safety and security and allocating a portion of the Budget in this regard is what we and other e-commerce startups like us who are working in the safety and security sector are expecting. Lowering the GST rate on women safety products to 5 percent from 18 percent would be one way to go about it. We also expect few women safety products to be as safety is not a luxury but a necessity. The import and export duty should get a revision so that trading in international markets gets a boost. The transportation charges in the railway should see a decline too as these will cut costs and make those safety products more affordable. To promote production in India, the women safety product manufacturers should get special benefits so that products become more affordable to the masses.
Saroja Yeramilli, CEO and Founder, Melorra, online jewellery
The government has had a pro-startup posture from the time it came into power. Last year, the government emphasised on digital payments and fee waivers on such transactions making it conducive for online retailers like Melorra. However, the increase in duty on gold import from 10 percent to 12.5 percent has been a dampener for us. There should be a smooth single-window process to make the entire journey of regulatory approvals and compliances less time-consuming for emerging businesses. This is more so in case of women-led startups. There must also be some regulatory change in the ESOP regime, making ESOP taxation available to employees at the time of sale instead of later.
Sanchit Gaurav, Co-founder, Housejoy, one-stop solution for all home-related needs
The government has recently infused capital in real estate and infrastructure but more needs to come in, particularly in Tier 2 and 3 areas. Technology is also disrupting the construction industry and with more fillip to the government’s Digital India and Make in India campaigns, it is possible to fuel its development further. The construction industry is in urgent need of a fundamental rehaul. If done in a timely and correct manner, it will not only help individual growth but also lead the economy towards recovery. We hope the budget will enable this and more.
Anil Kumar Prasanna, CEO, AxisRooms, channel management solution provider
We have seen some promising steps for startups by the government starting with removal of angel tax, MSME loans of Rs 1 crore and Mudra loans. The key problems persisting the policies are execution. Especially most of the time the MSME site for loan approval is always down as even with approval some startups have had problems to secure this loan. Every year we see allocation of large amount of money for startups. From the last allocation of 10,000 crores, we had only seen 30 percent allocated or deployed- too less compared to the allotted funds and there is still no accountability if this money has actually gone to startups or is with fund management companies like SIDBI.
Shashwat Diesh and Aqib Mohammed, Co-Founders, Azah-Female wellness startup
We hope the government makes changes in the current GST policy for businesses selling nil GST products and help balance the input–output tax to ensure more competitive prices for the Indian consumers and implement sustainable policies that help increase liquidity in households thereby increasing the consumption in our country in the near future.
Ambarish Ghosh, Founder and Director, The Hillcart Tales, Kolkata-based tea blending startup
The tea industry can become a powerhouse for generating employment in India. It can employ a great proportion of the million-plus workforce of the country in a variety of roles. For this, the sector must become more viable through reduction in the costs of production and increase in selling prices. There is a need for a uniform GST of 5 percent to be applied on all products including flavored teas. This will help the industry in sustaining itself. Another major area of focus should be on increasing the budgetary allocation for infrastructure development and ease of doing business in India which will help attract more foreign investments.
On the e-commerce front, the government should look at lowering income tax and putting more money in the hands of the consumers to encourage domestic consumption in the economy. Small or home entrepreneurs should be freed from GST obligations and the government must ensure parity between online and offline suppliers that have a turnover below Rs 40 lakh. Additionally, some clarity on e-commerce policies will set the pace for startups for the year ahead.
Kashish Jhamb, Executive Director and CEO, City Innovates, a tech startup in the digital marketing space
For Budget 2020, we would like the government to provide benefit to young entrepreneurs in terms of setting up of new companies or supporting new ideas by providing suitable subsidy. There should be a lower corporate tax of Rs 25 percent to 28 percent for young entrepreneurs which have less than to Rs 5 crore turnover. The Government speaks a lot about moving into the digital space and motivate small offline businesses to convert it into online businesses, but there is no support system from the government.
Nalin Agrawal (Founder and CEO, Snapmint, a financial services platform
The Budget should cut down duties on oil to reduce transportation costs so that the cost of distribution in Tier 2 to 5 cities comes down. The government needs to continue showing strong support to these cities by trying to upgrade the urban infrastructure by upgrading the MRTS, airports; introducing SEZs etc. Tier 2 to 5 cities and towns contribute more than 50 percent to ecommerce and online retail. However, there is limited logistical reach and reliability in these regions. Deeper penetration of courier services and further enhancement of postal services will go a long way in
cementing the logistical roadblocks.