Indian entrepreneurs’ expectations from the government have risen ever since Prime Minister Narendra Modi announced the action plan for the ‘Startup India, Standup India’ campaign.So what do startups expect from the forthcoming Union Budget, which will be announced on February 29?
The coming budget can be seen as the most important budget for the Startups in the recent years and in many ways can be seen as a watershed moment owing to the fact that the Startup India scheme was launched just a few days back. Mostly, entrepreneurs want issues related to the Goods and Services Tax (GST), angel tax, capital gains tax, IPO laws and service tax to be looked into.
It can be expected that Startups will favor the implementation of the GST at the earliest as it would help logistics businesses flourish. Startups will also wish for separate budgetary allocations for development of more accelerators and incubators. This would eventually help develop the startup ecosystem.
The angel tax, which startups need to pay when they raise funds from investors, should be abolished as it has been a major impediment in raising funds. Also, Startups operating in the sector of organic products want tax incentives to encourage the use of natural or organic products.
We also need to see more clarity on the next steps that detail out disbursement and get startups access to the fund of funds for start-ups. This would definitely encourage the promising entrepreneur community in India. The need of the hour is to improve the Infrastructure in the country and make much faster progress in connecting everyone and bringing them online. We need to take concrete steps to pick up the pace here and at least meet the targets set within the programs themselves.
Another area that could help start-ups grow is greater clarity and sharper differentiation between goods and services, this would be very helpful to clear up the TDS requirements on app downloads and TDS for software sales. The road map to GST in the upcoming budget will go a long way in both increasing the ease of doing business and reducing the cost of doing business. We can expect the government to simplify tax regime for startups to foster innovation and create conducive ecosystem for entrepreneurs in the country.
While tax holiday certainly brings a sigh of relief, it may not be beneficial for many technology startups who do not make profits in initial years of their commencement. A longer tax break time period for startups would be welcome as well as further simplification of tax and other regulatory requirements. Also, enabling faster, easier exits would be a welcome move as well.