Budget 2020: As the main cause of economic slowdown is lower demand, efforts must be taken to make available more disposable income in the hands of consumers through job creation and other incentives.
Union Budget 2020: As the economy is entangled in a vicious cycle of lower employment, lower demand and lower consumption, the industry hopes that, despite higher revenue deficits, the government would maintain the lower corporate tax rate that was cut by Finance Minister Nirmala Sitharaman to boost the sentiments.
As the main cause of economic slowdown is lower demand, efforts must be taken to make available more disposable income in the hands of consumers through job creation and other incentives.
As lower corporate rate would make available additional cash in the hands of corporates with no additional costs, they may expand production by employing more people, which would generate higher demand and consumption due to job creation to help break the shackle.
“We certainly expect the government to maintain the currently lowered corporate tax rate of 22 per cent, which has a direct influence on the scale-up plans of an organisation, especially Startups. This will enable liquidity of funds to invest back into the business, allow them to build research & technology verticals and aid overall expansion,” said Hemant Vishnoi, Co-Founder of corporate credit card company – EnKash.
As the lack of demand creates survival issue for Startups and lowers the sentiments of starting new ventures, it is also expected that the government should cut tax rates further for the Startups.
“The government should in fact consider bringing the corporate tax slab for Startups further down, to enable financial empowerment. This will be a definitive step towards supporting the Startup ecosystem and genuinely aid in growth. We also hope that the DPIIT registered Startups will continue to enjoy waiver on Angel tax, which will help them attract more investors in the future,” said Vishnoi.
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Apart from tax incentives, to boost the Startup ecosystem, the government may even need to nurture the Startups with additional funding.
“Startups that have witnessed swift growth and garnered a sizable user base within a short span of time, should also receive financial assistance from the government, to mark their outstanding performance,” said Vishnoi.
Speaking specifically with respect to the Fintech Industry, Vishnoi said, “We would like the government to further work towards building a cashless economy throughout the country and establish data centers in rural areas to aid digital payments.”