Budget 2019: Time to address the ESOP taxation anomaly

Neelesh Talathi, CFO, Pepperfry

Indian e-commerce at $40Bn is the fastest growing sector with potential to become world 3rd largest market at $450Bn in under a decade. As Modi 2.0 presents it first budget, our expectations are to address aspects of our economy such that this growth rate is sustained:

1. Digital India: Internet, Mobile connectivity & Boardband form the backbone of Digital India yet we rank 120th amongst 178 countries on mobile data speed. Addressing the stress in telecom is important to fill this void. It is also an opportune time to support the nascent and disruptive FinTech sector including addressing the challenges from the Aadhar judgment. Last Union Budget initiated projects around Blockchain and Artificial Intelligence areas in which we hope to see a clear roadmap to claim global leadership in coming years

2. Fuel Demand: The magic for Indian economy is the consumption demand of our Middle Class. We expect to see increased disposable income through lower taxation, next wave of development around affordable housing etc. Further India needs to sustain high GDP growth and the government should use this strong electoral mandate to drive structural changes particularly around land ownership, labour reforms and addressing the NPA issues

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3. ESOP: Employees across start-ups work to solve problems not earlier addressed. Naturally this is riskier, ESOP is a suitable reward for co-sharing the risk with the founders. It is time that we address the taxation anomaly on ESOP and place this important reward tool at par with long term capital gains

The author is the CFO of Pepperfry.