The Prime Minister’s flagship Startup India initiative “that empowers startups to grow through innovation and design” recently completed one year. After the startup community was considerably affected by the government’s sudden demonetisation drive, business ventures are hoping for a well thought out Union Budget on February 1 to provide some respite.
This week, Commerce and Industry Minister Nirmala Sitharaman said that startups are likely to get more tax benefits and that the tax exemption bracket is to go up from the existing three years to seven years.
Chandrajit Banerjee, Director-General of the Confederation of Indian Industry, had also expressed a similar opinion in his column in The Hindu,”The Budget should encourage the creation of startups by removing the burden of State regulation and thereby reducing compliance costs and the tax burden of successful startups. A startup could be defined as any firm less than 5 years old with no further qualification.”
- Reduction of compliance cost by removing state regulation
- Tax exemption bracket to go up from three to seven years
- Redefining what a startup actually means and provide support accordingly
- Anticipation of Corporate tax to be brought down
- Inception of a Virtual Hub to connect entrepreneurs
Meanwhile, Vaishali Neotia, Co-founder and CEO at Merixus, one of India’s leading Augmented and Virtual Reality companies, is of the opinion that the government should come up with a better definition of a startup. She says, “Instead of classifying by the number of years, the government should distinguish by the amount of capital a company has started off with. There are a lot of bootstrapped startups who work on developing their ideas and products without investment in the initial stage. These are the places who could use resource-based support and tax exemptions.”
A lot of bootstrapped startups who work on developing their ideas and products without investments in the initial stage. These are the places who could use resource-based support and tax exemptions
Swati Bhargava, Co-founder of CashKaro.com, anticipates that the Startup India project might be getting a boost in the Union Budget and also expects it to be positive towards the “poor, middle class and business community, particularly because these segments were most inconvenienced by Demonetization”. She expects a reduction in direct tax, lower income tax as well as corporate tax. The latter is also being recommended by the Confederation of Indian Industries on Twitter, “The Corporate Tax should be brought down to 18 per cent (all inclusive) to bring it in sync with the world standards.” The CII suggests that because of the high tax structure, companies have been wary of investing in the country.
Vaishali feels that the government should be more accountable and answerable to startups when they are promised an initial financial assistance as per the Startup India plan, but no bank is willing to give the loan. There should be a reverse process where startups can get pertinent queries resolved.
Hope for a scheme which would make obtaining resources from other countries more affordable
“As an augmented reality startup, we do have to procure a lot of raw material from abroad, even to innovate or build a one-off device. But the process becomes very expensive owing because of the custom charges. So I would hope for a scheme which would make obtaining resources from other countries more affordable,” adds Vaishali who is also looking forward to the inception of Virtual Hub (as promised by the Government), which would connect entrepreneurs, mentors and investors alike.
Swati says as a woman and an entrepreneur, she would be keen to see an increased allocation towards building infrastructure in India and increased planned public expenditure. She says, “This would go a long way in creating a safer and more conducive environment for women and furthermore in creating world class companies. Overall, as a taxpayer and a founder, I am eagerly waiting for February 1.”