With the sector being almost ignored during February's interim budget, startup sector has huge expectations from the upcoming budget to be presented by Finance Minister Nirmala Sitharaman later this week. The sector feels that the government should take initiative to set up startup hubs across India where startups will have access to multiple services at a single point. It is also time for the government to live up to its promise of boosting the startup revolution further by setting up 50,000 start-ups by 2024.
Co-working spaces, a thriving ground for startups, are encouraging their growth within its ecosystem. Many co-working firms expect the government to curb or altogether eliminate angel tax this budget as it would enable the firms to lease more spaces for startups, enterprises, MSMEs and entrepreneurs. Angel tax, many believe would destroy the start-up edifice and indirectly, co-working firms would desist from leasing co-work spaces.
Here are the major expectations of startups from the budget:
Sameer Aggarwal, founder and CEO, RevFin
Aggarwal feels that the government must have a clear way to ‘recognise’ startups and once an idea or a company qualifies, it should have complete access to all the facilities and exemptions, be it funds, hub services or tax benefits. “Investments made from capital gains (like sale of property or shares) in startups should be fully tax exempt. Further, long-term capital gains from startups should be made tax exempt. Recognition as a start up should automatically qualify companies for a startup fund which would have up to a 3-year repayment holiday until the startup is established,” remarked Aggarwal.
Arun Nagpal, co-founder and MD, Mrida Group
Nagpal wants a holistic rural development and feels that the government should continue to have sustained focus on entrepreneurship through startup India and other sources, besides facilitating easy availability of credit facilities through the banking system and the availability of growth capital through angel or private equity or venture capital investment.
Manas Mehrotra, Chairman, 315 Work Avenue
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“Angel funding is now being considered as income and is being taxed at the full income tax rate of 30 per cent. This will detract higher investment in co-working spaces. Co-work firms are also hoping that bank funding for startups is enhanced from Rs 25 lakh to Rs 1 crore to make available greater access to financial resources to startups. Also, considering that startups do not earn the profit in their initial business years, we expect that the government can lower the income tax slabs for startup employees, which will aid startups to reduce costs. Hence, we look ahead to some important tax exemptions that would give an enhancement to all existing and upcoming startups and which would increase demand for co-working spaces,” Mehrotra says.
Bhavin Turakhia, CEO, Zeta and Flock
“With technological disruption being key for startups’ growth today, we would urge the government to encourage investments in technology hubs that will help strengthen technologies such as Artificial Intelligence, Machine Learning, etc. The government must also work towards bringing in some respite to GST, by reducing the tax slab for technology services and products, encouraging the early adopter market to flourish,” Turakhia feels.
Rajiv M. Ranjan, founder and CMD, PaisaDukan
“It’s time the government looks at alternative financing option like P2P lending to solve the credit crisis. MSEs make about 65 per cent of the enterprises of India and contribute around 20 per cent of the overall GDP. P2P lending platforms can channelise idle wealth of Indian middle-class. To encourage retail investors to participate more in lending activities at P2P lending platforms, the budget should waive off tax on the interest earned by an individual investor through P2P lending,” Ranjan told THE WEEK.