'Reduce disparity in capital gains taxes for listed and unlisted firms'
BySanil Sachar, Co-founder, Huddle
“Early-stage acceleration of startups and venture capital have been fuelling the entrepreneurial growth in India over the last few years. Despite the pandemic-induced challenges, the country has been witnessing entrepreneurs and startups thriving due to early-stage acceleration and venture capital, as well as a push from the Indian government through acceleration programmes via 'Make in India', digitisation, etc. While this is a positive sign, the need of the hour through policy is to create a more robust startup ecosystem in the country is to reduce the disparity in capital gains taxes between investments in listed and unlisted companies, so more investors are incentivised to bet on early-stage startups. Through Budget 2022, the government should also consider easing angel tax restrictions so more startups and the overall ecosystem can benefit significantly. We strongly believe that simpler loan-disbursements, e-approvals and incentives to startups for adopting digital finance will help propel Indian startups, as well as the overall economy."
Policy support for startups in Budget will boost domestic capital participation
By Nayan Gala, Founder, JPIN
The union budget will create a great benefit for the startup ecosystem as the government will focus on investment-driven growth that will push companies of all sizes both in the public as well as the private sector. It would also raise additional resources through strategic investments, divestments and asset monetization.
The government should help in assisting startups through policies and support mechanisms towards domestic capital participation. Along with providing incentives to set up incubators, tax exemptions in FDIs and relaxing taxes for startups.
Prime Minister, Narendra Modi announcing National Startups Day this year, brings in an added advantage and benefit for the ecosystem and shows the rise and importance of startups in the country.
GST exemptions, easy access to working capital among startups' expectations
By Alok Kumar, Founder and CEO, StockDaddy
Out of 3,100Indian startups funded between 2014 and June 2020, 385 startups have shut down operations and it caused a loss of $760 mn. Further, funds dried up and close to 40 per centof startups halted operations in May 2020, according to a Nasscom report. Startups went through unprecedented challenges during the pandemic. Now, as the finance minister is going to present Union Budget 2022-23 on February 1st, this sector is looking forward to the government’s decision to elevate the startup ecosystem including the MSMEs.
Their first demand will be the volume-based GST exemption for a span of 2-3 years. Accordingly, the government should reduce the GST rate from 18 per cent currently to 5 per on start-ups across industries. They also expect a broadening of the ambit for tax exemptions, suggesting that the government pass on this benefit to all the registered start-ups under the Department for Promotion of Industry and Internal Trade (DPIIT).
One of the major problematic areas for small and young businesses is the availability of working capital. To address this pertinent issue, a framework that can mobilize funding for Startups and MSME will be a great initiative in the upcoming budget. It will bolster the growth of small businesses. Besides, industry players want that the government should extend credit facilities to MSMEs by re-levelling the banking and NBFCs to the same ground.
Loan and finance procedures must be eased for start-ups and MSMEs, the backbone of India’s manufacturing sector. So, collateral free business loans along with zero service fees to make the finance part hassle-free for the set up for new entrants, and loans should be available to them at a very nominal rate of interest. Also, profit-making startups should not be excluded from these benefits and relaxations. Annual targets of distribution of funds should be used to allocate finances to new ventures and the process for that should be easy going. Hence, designated banks should be constituted for ease of finance.
Small-scale businesses should be offered interest-free loans, incentives and subsidies
By Adetee Agarwaal, Founder and CEO, PinkAprons
"Our expectation from the budget is pretty simple, i.e., we need to grow, and we need to expand. Small-scale businesses should be offered interest-free loans, incentives and subsidies to survive, and manage their operations, besides lowering GST for cloud kitchens, home-based food entrepreneurs and food tech startups. Since the food industry employs the highest number of employees after real estate, the taxation slabs and GST needs to be streamlined, and relaxed to help small and medium scale food entrepreneurs to grow and scale.
We need a major taxation reform on this front, and a comprehensive Govt sponsored program to enhance consumption, and make it easier for customers to order their foods online."
'Cut taxes to motivate cos to invest in corporate health insurance'
By Saransh Garg, Co-founder and CEO of Nova Benefits,
Cutting taxes to motivate companies to invest in employee wellness services and corporate health insurance is the need of the hour. Presently, the GST levied on the purchase of health insurance policies or renewal of existing policies stands at 18 per cent. This number, which was reached after an increase of 3 per cent on service tax in the erstwhile tax regime, has turned out to be a source of additional financial burden on startups buying health insurance for their employees. Therefore, the expectation from the forthcoming union budget is to see a reasonable rebate on GST as far as health insurance is concerned. It is important to note that the Indian government has done its fair bit, especially with the prudent exemption of Angel Tax. Beginning 2019, this relief encouraged far greater diversity among investors, with a 93% increase in the number of startups eligible for exemption from Angel Tax in 2021. But that’s just one exemption – among countless others awaiting implementation and intended as a breather to Indian startups.
In my opinion, relaxing IPO-centric regulations is critical. At the moment, due to regulatory restrictions and requirements, IPO documents are required to call out all risks associated without being able to balance it enough with all the future potential of the company’s success. India’s startup ecosystem is on its way to reaching its full potential. Investors now have the scope to expand their portfolios by taking chances with loss-making companies. This, with the assumption that they will be profitable in the future – a true indicator of a maturing ecosystem.
Look forward to a startup friendly Budget
By Mr Roshan Farhan- Founder and CEO, Gobillion
"This year's Budget will be an important one to watch out for, given the government's focus on promoting startups and entrepreneurship in the country. We look forward to a startup friendly budget, with a focus on making starting a company easier, streamlined compliance mechanisms and avenues for access to capital for early-stage startups. We look forward to the Budget providing incentives to startups in tier 2+ towns to promote a more inclusive startup ecosystem. Startups in India will contribute strongly to realise our vision of a $5 trillion economy in the next few years."
'Startups need tax exemptions in FDIs and tax relaxation'
ByNayan Gala, Founder, JPIN
“The union budget will create a great benefit for the startup ecosystem as the government will focus on investment-driven growth that will push companies of all sizes both in the public as well as the private sector. It would also raise additional resources through strategic investments, divestments and asset monetization.
The government should help in assisting startups through policies and support mechanisms towards domestic capital participation. Along with providing incentives to set up incubators, tax exemptions in FDIs and relaxing taxes for startups.
Prime Minister, Narendra Modi announcing National Startups Day this year, brings in an added advantage and benefit for the ecosystem and shows the rise and importance of startups in the country”
Startup-friendly policies should be made to easily register a business and provide relaxation in taxes
By, Mohamad Faraz, Founding Partner, Upsparks
"The startup ecosystem in India has already emerged as the third-largest in the global market, which highlights the massive growth of the sector in recent years. The start-ups sector has also seen tremendous growth in recent times, despite the challenges and economic impact of the Covid-19 pandemic. To ease the burden on start-ups and promote this sector further, we expect the government to look into some of the pressing concerns. The most important area would be the overall ease of doing business, which includes setup and commencement of business and most importantly the entire tax structure and rules related to GST, income tax, etc. Startup-friendly policies should be made to easily register a business and provide relaxation in taxes till it reaches a minimum revenue and allow easy access to working capital. Given that more and more start-ups are growing in the country, and ESOPs being one of the most important tools to hire and retain skilled workers, we believe that ESOPs taxation should be eased or relaxed. Advance taxation should not be taken. Specific sectors within the start-up industry, particularly the crypto currency sector, have seen some major changes occurring in the recent past. There needs to be more clarity on crypto regulations as it is still a gray area in India and it is in a nascent stage. Most Indian blockchain/crypto start-ups are setting base in UAE, Singapore and other countries because of the lack of clarity with the regulations around it. Hence clearing the air on policies pertaining to new digital asset classes such as Crypto & NFT's will go a long way in helping Indian investors invest stress-free. We are looking forward to this being addressed in the upcoming budget. The government needs to encourage entrepreneurship because it is one of the best ways for job generation and progress economically. We hope that the government continues to roll out initiatives that provide a conducive environment for startups to thrive and flourish."
With formalisation come regulation and growth
By Annanya Sarthak, Co-Founder & CEO of Awign
"As a player working with conglomerates and decacorns, listed and unlisted alike, we have seen the industry grow at 2-3x, and we see this growth continuing. The CII has already advised increasing budget allocation for skill development and job creation, and enterprises have started investing in gigification, allowing them to expand into Tier II and III markets.
We see this growth as good, because with formalisation comes regulation, with regulation comes growth, and with growth comes opportunity. As someone who speaks to enterprises and their gig employees on a daily basis, this can only bode well not just for gig, but the entire Indian economy.
As India’s largest player in the space, we feel the space will continue to grow at 2-3x, leading to labour regulations such as social security benefits. The CII has already advised increasing budget allocation for skill development and job creation, and enterprises have also started investing in gigification, which is also helping them footprint Tier-II & 3 markets.
Though the gig economy’s breakneck pace of growth has not as yet been classified as a formal economy, we hope this changes this fiscal year, given gigs are putting food on the table for close to lakhs of Indian populace, especially the white-collar segment.
All in all, the gig economy will grow and how, this will lead to policies and regulation coming in, something that we and our enterprise partners welcome, as it formalises and democratises what has traditionally been viewed as just that - a gig."
Budget crucial to drive post-Covid growth
By Rajesh Khosla, President & CEO of AGI glaspac
"The forthcoming Union Budget is very crucial for the economy as the Finance Minister will have to balance a lot of things to steer the Indian economy in the post-Covid era. India has the potential to become a global manufacturing hub and as per data, by 2030 it can add to the tune of $500 billion annually to the global level.
We hope Budget 2022 will have some announcements towards a supporting framework in this direction. Initiatives are needed to increase the demand for the industry through special incentives, as it would lead to the creation of additional jobs. The companies are now looking forward to receiving direct fiscal support instead of the loan guarantee scheme from the Government in this budget that will help the manufacturing industry to tide over the third wave of Covid.”
Make it easy to list startups outside India
By Nilesh Patel, Co-Founder and CEO, Leadsquared,
"The significant investment made by the Government of India has played a pivotal role in nurturing the startup ecosystem. Initiatives like Startup India & Make in India have accelerated the growth of the ecosystem and impacted almost every sector in India. And in turn, startups contribute to the Government mission of driving job creation across the skill spectrum. One ask from Budget 2022 will be to make it easy to list startups outside India; it will be huge."
Subsidy to manage sale during lockdowns
Ramya Ravi, co-founder, RNR restaurant,
"The night & weekend curfew have dampened our sales. At such times our focus is to cover up with delivery sales through online aggregators. When our sales are impacted it becomes a challenge to manage our fixed expenses. With the weekend lockdown especially, where every restaurant would clock the highest sale, it became a bigger challenge. Therefore we certainly look forward to seeing some subsidy to manage the same. We hope to see an ease in taxation and support to employees who have been laid off."
Incentives to startups in tier 2+ towns a demand
By Roshan Farhan- Founder and CEO, Gobillion
"This year's budget will be an important one to watch out for - given the Government's focus in promoting startups and entrepreneurship in the country. We look forward to a startup friendly budget - with focus on making starting a company easier, streamlined compliance mechanisms and avenues for access to capital for early stage startups. We look forward to the Budget providing incentives to startups in tier 2+ towns to promote a more inclusive startup ecosystem. Startups in India will contribute strongly to realise our vision of a $5 trillion economy in the next few years."
Urgent need to infuse cash flow into startup ecosystem, tax exemptions would be a welcome move
By Nirav Choksi, Co-founder & CEO, CredAble
"2021 was a year of a record number of tech startup IPOs and unicorns in India.We are optimistic that Budget 2022 will have a renewed focus on startups considering how India is now third in the unicorn race, replacing the UK. With the last budget allowing an exemption of capital gains for investment till March 31, 2022 — this year we are expecting incentives and policy measures that will relax the tax burdens on the sector, increase access to credit and create an investor-friendly ecosystem.
Last year we saw the Indian startup sector skyrocket with a 3x increase in the total funding. Even with rising unicorns, one of the biggest challenges that we see today is that the startup ecosystem as a whole lacks a compelling revenue base. There is an urgent need to infuse cash flow into the startup ecosystem. Additionally, tax exemptions in FDIs would be a welcomed move that will further aid in the globalisation of these startups.From the NBFCs point of view, there is a dire need to bring about stability in the sector. It’s important to take into consideration that NBFCs play a crucial role in promoting financial inclusion. Policies that will enable funding in the sector are expected to help NBFCs whether the current liquidity crunch.
In this regard, the priority sector lending of banks to NBFCs, which was previously mandated by the RBI; must be made available on an ongoing basis, subject to certain limitations. Further, issuing NCDs should be a less complex and more cost-effective procedure."
Neobanks to play a crucial role in coming years, KYC requirements can be further streamlined
By Mukund Rao, Co-Founder, muvin,
"Neobanks are still a relatively new construct in India but will take on significant importance in the years to come. The support from the Government will certainly play a crucial role.
On the lending side in particular, the guidelines being envisaged by the RBI around digital lending will bring about some much needed transparency for consumers. The Niti Ayog recommendations on establishing a framework for Digital Banks will help neobanks to potentially transition from being pure technology and customer acquisition layer to a full fledged digital bank. This in turn will open up massive opportunities to offer very customized and tailored offerings to both retail and enterprise customers in the country.
KYC requirements can be further streamlined- clear guidance could be provided on Aadhar based KYC with OTP."
Union Budget: Indian startups seek friendly policies, tax incentives
To further aid small businesses and empower entrepreneurs, the Union Budget 2022-23 should introduce additional startup-friendly policies and tax relaxations to enable spending on innovation, ease-of-doing-business and reducing compliance costs, a slew of homegrown startups said.
New reforms, policy assistance and support mechanisms for establishing a focused approach in solving unmet financial needs through technology will significantly benefit the economy, they stressed.