The startup ecosystem has plenty to look forward to courtesy Finance Minister Nirmala Sitharaman’s visionary maiden budget.
With tax SOPs, ease of regulatory FDI norms, support for EV startups and plenty of other benefits, the current government seems keen to encourage a fertile environment for startups and solve India’s employment problem.
Finance Minister Nirmala Sitharaman presented her first budget on 5th July 2019 and the biggest relief came in the form of exemption from angel tax assessment for startups and their investors who provide requisite declarations on their returns.
Startups are essentially smart ideas that are funded by ‘angels’ to turn them into real businesses. In the process of trying to build their brand, acquire customers, and expand revenue streams, entrepreneurs tend to burn a hole in their pockets. This is where angel investors come to the rescue. They provide monetary benefits at various stages of a startup’s initial life in order to sustain it financially.
Sitharaman also stated that the identity of those who invest in startups as well as the source of funds will henceforth be established by a simple e-verification process. This means that the Income Tax Department will no longer have the power to scrutinise the source of funds raised by startups.
This tax mess had discouraged several smart young people in the past from turning their ideas into businesses.
Apart from this, Sitharaman has also announced proposals to relax conditions for the carry forward and set-off of losses for eligible startups.
Furthermore, she promised that special administrative arrangements would be made by the Central Board of Direct Taxes (CBDT) for “pending assessments of start-ups and redressal of their grievances”.
Also, a dedicated TV channel for startups will be put in place that allows more and more people to present and propagate their ideas to investors and interact with them. This will also help them to build their brands and reach out to potential customers and clients.
This year’s budget has also increased incentives for women entrepreneurs at the grassroots level and has also increased the start-up age has been extended from 7 years to 10 years.
The government has also proposed plans to relax FDI norms for the AVGC (animation, visual effects, gaming, comics), aviation & CGI industry. It also plans to strengthen banks, NBFCs, and the debt and bond markets so as to help startups find sources for tapping funds.
Hopefully, we will see many other policy changes, including reserving some government contracts for startups to make India a startup nation and the hub of innovation.