Prime Minister Narendra Modi’s proposals to provide income tax exemption for startups for the first three years and give tax exemption on capital gains were well received by the startups, who believed that these moves will enable more entrepreneurs to come into the system. The assurance by finance minister Arun Jaitley that the forthcoming budget will be more tax friendly for the startup ecosystem has raised hopes among entrepreneurs that capital flows into the segment will expand beyond the realm of venture capitalists and private equity.
The startups in India and investors are faced with niggling tax issues like the angel tax on investments and burdensome compliance procedure which defocuses entrepreneurs from their core business while discourages prospective investors. In this context these proposals are bound to provide great relief. The move to provide faster exit for startups, which can now rely on a fund of funds of R10,000 crore, and the setting up of a panel of facilitators to help in filing of patent applications were proposals which were met with maximum cheer.
Ashish Goel, co-founder and CEO, Urban Ladder, an online furniture company, told FE, “Clarity of listing norms, faster clearances and inclusive growth will encourage entrepreneurs to build innovative businesses. Secondly, there is a need for a seasoned entrepreneur to chair the entrepreneurial cell to have a better perspective of the challenges faced and resolve issues faster.”
Startups in India witnessed a total investment of $9 billion in 2015 which is equal to the total flow into this segment between 2010 and 2014. But there is a view in the startup ecosystem that this would surge even further in a more simplified regulatory environment.
Pramod Saxena, chairman, Oxigen Services, a digital payment services company, said, “If government ensures a frictionless access to early-stage capital to young entrepreneurs, we will see many more startups in areas of priority.”
IT trade body Nasscom’s president R Chandrashekhar said, “Policy regulations like ease of compliance, reliance on self-certification instead of audits, tax exemptions for startups will allow entrepreneurs to devote their time, energy and resources to build upon their innovative ideas.”