Last year was a topsy-turvy ride for the Indian start-ups. We saw a dip in the total amount of the money raised by the start-ups, but silver lining was that there was a significant increase in the number of deals. Government’s efforts to encourage start-ups have been reaping its results, as the number of the start-ups mushrooming has been increasing with each year. As we have entered in the new year, hoping for the new beginning. The budget 2017 is right around the corner the whole corporate sector have their eyes glued on, especially start-ups, which will be hoping for an extra boost after the budget. Some of the things that we can expect for the budget;
The revised deadline on July 1st by the finance minister will be met in all probabilities. GST is the most single required tax regime which is required. The slabs and sharing percent of state and centre will always be debatable, but a unified tax is required to bring down bureaucracy and at least make our country borderless. It will increase industry efficient across the board and will have a positive impact in the next 3 year.
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2. Cashless Economy
We expect the government to continue updating the regulatory framework. One must realise that we live in India and Bharat, two economies running parallel to combine into our growth output. Investment announcement into establishment of greater spending on data connectivity and digital hubs in “bharat” are expected. This will propel the fintech start-ups to the greater heights.
3. Revision in Tax Slabs
We are expecting a favourable change in Income Tax Slabs, Corporate Tax & abolishment of some indirect taxation. If Demonetisation was the ignition, then the throttle would be lower taxation overall, as it would widen the base of taxpayers. A lower tax regime and increased exempted tax income is required to swing back the sentiment of the Indian citizen to get back on track of growth and prosperity. On the other hand a negative change in capital gains would hurt consumer sentiments in the real estate industry.
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4. Start-ups might be given exemption to MAT
If rumour mills are to be believed, MAT could be done away with for start-ups, while this is a good sign and much encouraging for the start-up community and budding entrepreneurs, it is still to been seen as to what extent and which companies would fall under this ambit, as currently the process to be recognised as a start-up is very tedious.
5. Housing & Infrastructure
For housing and infrastructure, government may attempt to boost the demand,
Government is expected to give a push to its revived PPP (Public Private Partnership) effort; we do expect some announcements on this subject. Further Infrastructure Investment Trusts should be rationalised, under section 47 xvii of the act, SPV shares can be transferred to a trust, but increasing businesses are following the LLP model, the benefits should be treated for LLP s also, as well capital gains on transferred asset should be exempted.
The government should increase tax deduction limit for housing loans, as this will encourage buyers to buy inventory, as well as let banks deploy capital efficiently. Currently limit of INR 2 lakhs holds less significance, as within metro cities average house cost is nearly Rs. 40/50 Lakh. Another boost could be greater House Rent Allowance as deduction from salary. Currently a salaried individual can claim only INR 2000 a month; this should be linked to rental housing pricing trends, as well as individuals’ tax slabs.
We can only speculate the outcome and the major beneficiaries of the budget; however, it is still to be seen as what lies in the Pandora’s Box.
(The article has been written by Rohit Chokhani, Principal Founder, White Unicorn Ventures. All the views expressed are personal)