Budget should deal with angel tax to encourage startups

By Mayank Bidawatka & Mr Aprameya Radhakrishna,

An economy grows leaps and bounds when many new people get additional spending power. We’ve seen that happen in China and the positive effects of disposable income increasing. The amount collected from income tax is very low in India. A very small % of the population pays this tax and most non-salaried people find smart ways to avoid paying this tax. Of the salaried, majority of the people paying tax are in the lower rung. As a result, the have-nots get axed. Instead, if we could increase the lowest tax bracket from 2.5 lakhs to 6 lakhs, that could help increase disposable income for the majority. Taxes could shift more towards consumption rather than on earnings. Even abandoning income tax for people and increasing it on luxury consumption could have a huge effect in giving a fillip to the economy.

The angel tax caused a lot of heartburn in the ecosystem. While the tax was abolished, we should be careful of any policy that hurts the startup ecosystem.
In this day and age of technology, a lot of the innovation will be seen from startups rather than larger established companies. Anything that hampers this innovation will hamper India’s future growth. The government should do everything in its power to help fuel innovation in India and ban policies that hamper such future growth.

The authors are Co-founder at Vokal