Union Budget 2019: The Budget proposals on angel tax, education, skilling, digital payments, research and innovation will benefit multiple stakeholders in the tech and startup sector
By Srinath Srinivasan
Budget 2019 India: Finance minister Nirmala Sitharaman has attracted positive responses from the Indian technology and startup community with her Budget proposals. The proposals address a range of topics, from tax exemptions to education, skilling, digital payments, research and innovation—all of which are of interest to stakeholders in the technology and startup circles in the country.
“The Budget announcements aim at removing the angel tax cholesterol from startups and it will boost the startup ecosystem. It is setting a way forward for the next five years by showing intent to solve startup related issues,” says Nakul Saxena, director of policy, iSPIRT. Startups can now submit declarations for assessment and have their angel investors e-verfied to get angel tax exemption. According to Saxena, e-verification of angel investors is an important step towards removing Section 68 of the Income Tax Act which has been a concern for the community all this while.
As a big boost to electric vehicle (EV) making startups and bigger manufacturers, the Budget addressed incentivising the purchase of EVs and setting up charging infrastructure in the country. “The government has already moved the GST Council to lower GST on EVs from 12% to 5% and the latest announcement addresses the concern on the upfront cost of purchasing electric vehicles.
This is the best example of a consumer-driven change,” says Tarun Mehta, co-founder and CEO, Ather Energy. The government will provide additional income tax deduction of upto Rs 1.5 lakh on interest paid on loans availed by consumers to purchase EVs. Also, some crucial investments in semi-conductor fabrication, lithium batteries, solar photvoltaic cells will enjoy some tax benefits. Mehta believes this move can have 5-6% direct impact on the manufacturing cost of the vehicles.
Adding to the increasing usage of digital payments, the Budget discourages business payments by cash. “The Budget meets expectations from the industry and seems fairly positive for fintech,” says Harshil Mathur, co-founder and CEO, Razorpay, talking about the digital payments push.
Encompassing all economic activities is skilling and education, and the Budget has enthused the academia. The proposed New National Education Policy for schools and higher education will focus on research and innovation. To assimilate research grants given by various ministries and to coordinate any additional supplementary funds, a National Research Foundation will be set up. This goes in line with the government’s interest in bolstering modern technologies such as Artificial Intelligence (AI), Internet of Things (IoT), 3D printing, Virtual Reality (VR), Robotics and Big Data.
“There is a clear need to develop two kinds of skill-sets on a broad scale—technology skills and human skills or skills such as complex reasoning that equip humans to work in collaboration with machines. Building these capabilities and addressing the skills deficit at a national scale, requires a robust skilling framework with digital technologies at its core,” says Rekha M Menon, chairman and senior managing director, Accenture in India.
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There is also more reasons for MSMEs and startups to rejoice. A proposal to start a TV channel for startups in the Doordarshan bouquet of channels is expected to project the Indian startup ecosystem globally and connect it with potential investors.
On the tax front, a fully automated GST refund module will be implemented and to clear the existing notices to startups, Central Board of Direct Taxes (CBDT) will provide a special administrative programme. Faceless assessments in electronic mode will also be introduced this year in phases across the country, controlled by a central cell. For rural businesses, skilling and educational purposes, BharatNet will provide connectivity.