Budget 2018: Union Budget will be presented on February 1. Expectations surrounding the Budget 2018 India are rising. Startups are expecting a few favourable announcements from Financial Minister Arun Jaitley. Notably, two years ago in January 2016, Prime Minister Narendra Modi launched the ‘Startup India’ campaign in order to boost digital entrepreneurship at the grassroots level. The goal was to encourage entrepreneurship in all sections of the society and to create more jobs for a number of people. SMEs are the nation’s growth engine – both in the brick and mortar as well as in the services space.
While many industries have already raised their queries to the Modi government, it is the startup ecosystem that is expecting Arun Jaitley to take some practical and concrete steps so as to boost the ecosystem. In his view on the upcoming Budget 2018, Shudeep Majumdar, the Director Corporate Affairs of a Delhi based startup, Zefmo Media Private Limited, has highlighted the expectations from the point of view of a startup. Here take a look at what startups want from Union Budget 2018:
Expectations for SME industry
Looking at the approaching budget 2018 from the point of SMEs in the digital marketing industry, the entrepreneurs feel that there will be more incentives on the way for small start-ups in the digital segment with the government heavily promoting it’s Digital India’ and ‘Make in India’ initiatives.
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Strengthening the digital infrastructure
In the fast-growing digital world, the government needs to spur adoptions of the internet for business and payments, making the budget 2018 a viable way to bring the much-required policy reforms that will help in digitizing the economy. The government also needs to push towards digital infrastructure and further develop its smart cities initiative, as improvement of infrastructure in these cities, especially tier 2 and 3 cities, which will further help in making the whole country cashless economy.
Creation of startup incubators
One of the major expectations of the entrepreneurs with regard to the Budget 2018 is that it should propose the creation of startup incubators or capsules as part of the existing Smart City initiative. The entrepreneurs expect that this initiative will help the startups, in turn, to contribute towards the development of such zones. The main purpose of an incubator is to help startups to grow. They are collaborative programmes which help people solve problems associated with launching a startup by providing a space to work, mentoring, training, seed funding, and other benefits.
Tax Reform, the next leap
In the upcoming Budget 2018, startups are expecting a revision of GST rates by further simplifying the structures and income tax filing process to enhance ease of doing business and motivating startups. “We also look forward to some important tax exemptions that would give a boost to all existing and upcoming startups,” Majumdar said.
• Income tax exemption:
With various path-breaking policy reforms, Narendra Modi government have already paved way for a New India by 2022. In an initiative to help Indian entrepreneurs, the Prime Minister had started the Startup India campaign in order to support the startup entrepreneurs in their attempt to set up new businesses. To ensure that the startup ecosystem remains vibrant and thriving, it is imperative that the Startup India program should extend both financial and mentoring support to a wider base in the upcoming Budget 2018. Majumdar highlighted the facts that while over 6,000 companies have been recognised as startups, less than 75 of them eligible for income tax exemption. The startups are looking forward to a budget that will set the momentum rolling for the economy in 2018.
• Corporate tax rates:
In the upcoming Budget 2018, the entrepreneurs are hoping that there will be a reduction in corporate tax rates to 25%, as well as administrative and tax reforms suggested in the Easwar Committee Report.
• Angel Tax and MAT Tax:
Angel taxation – is the taxing of investments made by angel investors into startups. The entrepreneurs, in the upcoming Budget 2018, are hoping that government will not impose angel tax as it can be a death knell for the startup ecosystem. The startups are also expecting the government to keep Minimum Alternate Tax (MAT) out of the purview of tax holiday for them.
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Boost that Startups need
The startups are quite hopeful, that the Finance Minister Arun Jaitley in the upcoming Union Budget 2018 will continue driving and promoting ‘Skill India’ alongside encouraging the growth of startups in the country to bring more jobs and consumer-centric innovations in the market.
Regulatory rules governing Startups regarding loans to MSME sector
Majumdar highlighted the need for the support of the government in granting more loans for SMEs and MSME to come into the market with reduced interest rates, and easier financing options while also seeking government’s expansion of Mudraa and other credit guarantee schemes to cover startups. From Budget 2018, the entrepreneurs also appealed the government to keep Minimum Alternate Tax (MAT) out of the purview of tax holiday for startups.