Union Budget 2019: A lot of hopes of small companies are riding on the maiden budget of finance minister Nirmala Sitharaman. Small and medium sized companies play a crucial role in India’s economic growth, exports and job creations. However, except for a few cases, these companies are required to follow the same set of labour laws and other compliances as large companies. Small companies expect that not only Modi government will announce some relief to them on tax front but the government will also announce some policy measures in this budget to reduce their compliance burden.

Fifty-one-year-old Sanjay Agarwal, who co-founded a Noida based company Umbrella Infocare to offer cloud and technology services, expects the government to reduce the burden of compliance on small companies.

“There are three issues that the government should address in this budget, high cost of compliance, high taxes and it should simplify the labour laws,” said Sanjay Agarwal, co-founder of Umbrella Infocare.

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Sanjay Agarwal talks about the problem faced by those technology and internet companies that operate in a niche market and do not need large manpower unlike IT giants like TCS and Infosys.

“It will not work if you apply the same laws to a small IT and software company like us that are applicable to a manufacturing company or even a large IT company. It will not help,” Sanjay Agarwal told Financial Express Online.

Sanjay Agarwal’s company Umbrella Infocare has little over 100 employees spread over four locations in India. However, it needs to comply with all the labour laws like the ESI scheme and EPFO.

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ESI scheme is applicable to all those establishments that employ 10 or more people and any firm or company having more than 20 employees must register with EPFO as these are considered vital for social security of workers.

“It does add to our cost,” added Sanjay Agarwal.

Smaller companies are also seeking some kind of tax holiday to expand their operations. In 2016, then finance minister Arun Jaitley had reduced the corporate tax rate to 25% on the companies with a turnover of less than Rs 50 crore. Next year, he had extended the same relief to the companies with a turnover of up to Rs 250 crore.

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