The cut in the tax deducted at source (TDS) for e-commerce operators from 1% to 0.1% will make life easier for sellers on platforms such as Flipkart, Amazon and Swiggy, by easing their working capital needs. Further, the Rs 1,000-crore venture fund for the space economy and plans to digitise agriculture have also been welcomed by the industry. The government’s move to lower the corporate tax rate for foreign companies to 35% could benefit companies that operate both a business and a global capability centre (GCC).
Vinod Kumar, founder, India SME Forum, said the 1% TDS on gross e-commerce sales was a big concern, especially for smaller sellers operating with limited working capital. “In the competitive landscape, margins for small sellers are typically around 5-6%, so the 1% TDS could reduce profits by up to 20%,” he pointed out.
Dhiresh Bansal, chief financial officer, Meesho, said a lower TDS will enhance liquidity and improve working capital efficiency, creating more parity between online and offline retailing. A spokesperson for Swiggy said it would help the ecosystem, especially the small and medium scale restaurants, to better manage cash flow issues.
The Rs 1,000-crore venture capital fund for the space economy, experts say, has the potential to catalyse startups. Arpan Sahoo, co-founder of KaleidEO, said it “addresses a crucial funding gap in the nascent space R&D.”
Highlighting the signalling effect, Tushar Jadhav of Manastu Space said he sees a “cumulative effect of Rs 3,000 crore-Rs 5,000 crore” in private investments.
However, Rohan Ganapathy from Bellatrix Aerospace, a spacecraft propulsion systems developer, said it would “only be enough to support early-stage startups”.
Anirudh Sharma of Digantara, a space domain specialist, stressed the need for the government to act as “a primary customer”.
Pareekh Jain, chief executive officer, EIIRTrends, said the tax cut to 35% could prompt more foreign companies to set up GCCs here. GCCs typically engage in transfer pricing and are subject to different tax regulations. Hence, the impact on them, of the tax rate cut, is nuanced. However, companies that operate both GCCs and business entities in India are likely to see significant benefits.
The government plans to develop Digital Public Infrastructure (DPI) that will integrate 60 million farmers and their land into a comprehensive digital registry. Building on the success of a pilot project, this initiative will see a digital crop survey for Kharif crops being conducted in 400 districts this year. It also plans to develop DPI applications at a population scale for various sectors, including credit, e-commerce, education, health, law and justice, logistics, MSME services, and urban governance. These applications are expected to drive productivity gains, create business opportunities, and foster innovation by the private sector. All remaining services of Customs and income tax, including rectification and appellate orders, will be digitised over the next two years.