We know how to cross the river even amid a storm. Indian economy has held its ground firmly but the global risk is mounting.”
This year, Jaitley’s budget agenda is based on the nine pillars such as Agriculture and farmers welfare, Rural sector, Social sector including healthcare, Education skills and job creation, Infrastructure and investment, Financial Sector reforms, Ease of doing business, Fiscal discipline and Tax reforms to reduce compliance burden.
However, the much awaited Union Budget 2016-17 received mixed reactions across various industries. Different sectors were expecting a lot especially through the taxation policies.
“Despite massive expectations and build-up no new start-up initiatives were announced. Changes to the capital gains tax, 100 per cent tax deduction on profits made by start-ups in the first 3 years, new laws for ease of doing business, changes to the companies act and regulations in the patent law were already announced during the Start-up India initiative”, opined Bipin Preet Singh, CE0 & Co-Founder MobiKwik.
Prime Minister Narendra Modi’s Start-up India Stand-Up India initiative created a lot of buzz among start-ups and thus, the Start-up industry was expecting lot more from the proposed budget.
Expressing his views, Bhavish Aggarwal, Co-Founder & CEO, Ola Cabs said, “We are excited to have an inclusive, forward-looking budget that lays a strong foundation for growth and development in the country. Focus on skill development will have a domino effect on employment, financial independence and GDP growth.”
Last year IT start-ups received Rs. 1000 crore and likewise, this time Jaitely announced an allocation of Rs. 500 crore women/SC/ST entrepreneurs as part of Star-up India and Stand-Up India initiative.
Kiran Murthy, CEO, AskMeBazaar welcomed this budget as a progressive step in the right direction with an intention to promote entrepreneurship and encouraging start-ups in India. Murthy believes that announcements will help to create a favourable business environment in the country.
On the other side, according to Singh, allocation of 500 crores for women/SC/ST entrepreneurs as part of Start-up India Stand-up India initiative is another validation of the fact that start-ups have a critical part in driving India’s growth.
The government in the past had mentioned to cut down the corporate tax and has proposed with regard to small units having a turnover of Rs 5 crore, reduction in corporate tax rate from 30 per cent to 29 per cent.
According to Zafar Rais, CEO, Mindshift Interactive, from a media and advertising stand point, an increase in ST especially on electronic goods doesn’t seem favourable at all.
“Currently, India’s exponential mobile penetration and app consumption patterns are driving the growth of the mobile advertising industry, and this tax increment could hamper the innovation efforts of the entire ecosystem comprising mobile development start-ups, advertisers and publishers. We would have preferred a more future-focused policy regarding this particular aspect, added Rais.
Jaitely further added that Prime Minister Narendra Modi’s scheme which was announced at Start-up India Stand-up India. Under this scheme, start-ups received a three-year tax holiday and exemption of capital gains tax for venture capital investments in them, as part of a host of incentives to promote new enterprises in the country.
Expressing her views Ankita Jain, Co-Founder, GoPaisa, said, “We are positively enthused by the budget statement of no taxes for any 3 concurrent years out of the first 5 years of companies incorporation, as the earlier policy only covered no taxes for first 3 years, and the same provided no relief for alt east 90 per cent of start-ups.”
Jaitley lowered the corporate tax rate for companies with a turnover of Rs.5 crore or less to 29 per cent plus surcharge and cess from 30 per cent plus surcharge and cess.
“Lowering of Corporate IT rate for companies (for new manufacturing companies and SMBs) not exceeding Rs. 5 crore turnover to 25 per cent plus surcharge, tax holiday for start-ups for three of five years of setting up the company, the massive investment in the road infrastructure would provide support and boost to the MSMEs, start-ups and our overall ecommerce industry”, opined Dinesh Agarwal, Founder and CEO, IndiaMart.
He also announced a corporate tax rate of 25 per cent for all new manufacturing companies incorporated from 1 April, provided they do not claim any exemptions.
With the recent announcement by Government around waiving off surcharge and convenience fee, Govind Rajan, COO, FreeCharge believes that this move will further open up the scope for automation of payments at Fair Price Shops by embracing new forms of digital payments like wallets.
“We are also excited to see Government’s push towards research and innovation and 80 per cent discount on filing patent applications by start-ups will further see new home-grown innovations coming from start-ups. This will not only bolster the Start-up India, Stand-Up India initiative but also create a great environment for tech innovation in the country,” commented Rajan.
