A big fillip to entrepreneurial energy is an overarching expectation from the Budget. A clear tax regime is at the centre of their wishlist of entrepreneurs. Fixing the tax structure may stop some of the startup drain, the trend of start-ups leaving India for other tax-friendly countries like Singapore. Start Up India Day in January saw the launch of the Rs 10,000-crore fund with exemptions from income tax, capital gains tax and a big rebate in patent filing cost – these need to be addressed during the upcoming Budget. We know ‘what’ may be exempted but ‘how’ is the biggest question.

Angel Tax: Equity investments from angel investors into start-ups should not be taxed irrespective of the valuation. For now owners fear that if both the company and the investor have agreed on a valuation, the tax department may impose an income tax.

Nasscom too urged the government to exempt start-ups from direct and indirect taxes, something that would reduce compliance burden and reduce cash outflows.

Budget 2016
Budget 2016 (pic by Morgan Mckinley)

President R Chandrasekhar said that policy regulations like the ease of compliance, reliance on self-certification instead of audits, and tax exemptions for start-ups will allow entrepreneurs to devote their time, energy, and resources to build upon their innovative ideas.

Tax Breaks: The Start Up Action plan talked of a three-year holiday from paying income taxes. This needs to be spelt out in fineprint.

Rs 10,000 crore corpus: Details on how these funds will be allocated and more on eligibility criteria would be welcome. Most women entrepreneurs for example want to know if there is a certain amount of money allocated for female founders especially. As well the question on who qualifies for the same.

Ease of doing business: Snapdeal Founder Kunal Bahl said at the recently concluded Make In India week that Indian regulations were dated. “What is needed is the simplification of regulations and not more regulations,” he said.

Digital payments space: With a large number of players entering digital payments space, Budget could shed light on how this area would be developed further given the large numbers using it. Comments on digital banking, peer-to-peer transfers and other new-age mobile payment concepts should get some direction from the government.