The white paper said that companies are unable to carry forward and set off the business losses that they incur in the initial years of their operations
E-commerce major Snapdeal and PwC India in a joint report has made a case for relaxing norms on carrying forward losses a company makes in the initial years. The point was made in a white paper released on Thursday ahead of the Union budget.
The white paper said that companies are unable to carry forward and set off the business losses that they incur in the initial years of their operations, because of the dilution of the original promoter shareholding beyond 49%, to other investors/VCs/PE players. It said it has become a norm for a company to change its shareholding pattern often due to multiple VCs and PEs investing in a single round.
“India is the world’s fastest growing digital commerce market in the world with a 60% growth year-on-year. It is imperative that regulation, policy and business evolve in sync and recalibrate often so that the rules of engagement are mutually clear, contemporary and relevant. The responsibility of this lies both with the government and the industry,” said Kunal Bahl, co-founder and CEO, Snapdeal.
The white paper advocates to extend the period of carrying-forwards of losses from the current 8 years to 10-12 years.
“In line with the government’s Start Up India initiative, government may consider exempting the application of the provisions of section 79 to all start-ups, as defined under the start-up policy,” the white paper suggested.
“We are delighted to be able to combine Snapdeal’s unparalleled industry knowledge and experience of dealing with several policy and regulatory challenges, with PwC’s tax and regulatory expertise. The communiqué attempts to present a picture of the real-time issues facing the industry and suggestions on how to tackle them in an effective manner,” said Sandeep Ladda, Partner– Technology and e-commerce, PwC India.