Budget 2020: Expectations of coworking industry

By Anand Vemuri

"Coworking space providers have changed the market scenario of the real estate industry with multiple companies and organizations now opting for them. Gone are the days when just startups and young budding entrepreneurs chose coworking spaces. Nowadays, many larger organizations are consciously moving to coworking offices rather than paying huge rents. Not only do they help in saving costs, but there are also multiple other benefits such as hassle-free and cost-efficient infrastructure, flexibility, community engagement, networking, etc. Considering the increasing popularity of coworking spaces, we are well aware that the demand for these will be on the rise. Below are some of the expectations that we, as coworking space providers, have from the upcoming budget 2020:

Startup support: The government must provide assistance and support for startups to be able to grow through:

Tax benefit to angels for investing in startups. If Govt provides incentives/ tax benefits for investing in startups, there will be increased interest among the investor community. Tax benefits are indeed one of the most lucrative incentives to ensure more investors opting to invest in exciting startups. This will also help the startups with the assistance and support that they may require to grow.

Reduce GST to the lowest slab for upcoming entrepreneurs and startups as it affects the budget of startups and innovative companies that are new in the market. At present, an input tax credit under GST is an important issue that needs concern in this sector. Under GST provision, it will be beneficial if we are allowed to claim inputs credits on work contract and construction services supplied.

Virtual Office: Further, Various RoC (Registrar of Companies) use different yardsticks to accept virtual office product in the company registration process. Govt must create guidelines to recognize the virtual office as a separate product.

Registered office address: Currently only the company can inform ROC about change of address. The landlord/incubator /coworking space doesn't have a way to inform the ROC that a company has left it.

Loans: Almost all loans still work only if you can give collateral. Govt. must allow govt. banks to give loans to coworking spaces against cash flow of co-working players. Today, many new players are entering the coworking market due to the rising popularity and demand. However, the cash crunch is one of the major hurdles in their journey. If Government banks encourage these businesses by providing loans at a lower interest rate, it will help generate cash flow for them. It will increase the liquidity of cash and generate better business opportunities for coworking space providers.

Helping with Unused Govt Properties: Providing unused/underused govt buildings at a subsidized rate or in revenue share manner to coworking spaces. This can help entrepreneurs get access to good infra & ecosystem at a very low rate

TDS Rates Reduction: TDS reduction wherein clients for coworking spaces deduct TDS at 0.5-1%. TDS is a big hit on cash flow for coworking companies and it restricts their growth as refunds take almost 2 yrs to come.

Lower GST: Currently, coworking spaces end up charging a GST of 18% to all clients. This is a big impact to startups. Instead, coworking spaces should be allowed to provide services to startups at 0% GST like institute-based-incubators."

(Anand Vemuri, CEO, 91springboard)