Jaitley promises fewer regulations to boost start-ups

Jaitley promises fewer regulations to boost start-ups

Jaitley promises fewer regulations to boost start-ups
Pledging to ease regulations to encourage start-up businesses, the government today indicated lowering long-term capital gains tax for new ventures in the Budget for the next fiscal.

Finance Minister Arun Jaitley said the efforts over the last few years have been "to restrict the role of the state, essentially as a facilitator" and the aim now is to reduce obstacles and make the tax regime friendlier.

"We have already worked on an entrepreneur-friendly taxation regime. There are some steps which can be taken up by notifications, which would be taken forthwith. Others require legislative provisions, which can only come as part of the Finance Bill when Budget is presented in order to create a friendly taxation regime for start-ups," he said.

Speaking at a start-up business conference attended by SoftBank head Masayoshi Son and Uber Chief Executive Travis Kalanick, he assured that both the banking system and the government will make the resources available to them.

"The Reserve Bank and the government, acting in tandem, are going to add to bankers' ability to lend with vigour and in greater amounts," he said.

Revenue Secretary Hasmukh Adhia said the Budget next month will address the anomaly of venture capital funds in unlisted companies attracting a long-term capital gains of 20 per cent compared with nil for investment in listed equities.

"If somebody is making hot investment is equity market, if he keeps it for one year, after one year there is zero capital gain. Compared with that, people who have been taking the risk of putting long-term equity investment in unlisted security, like in the case of start-up, they have to pay 20 per cent even after 3 years," Adhia said.

"Now this gap is too wide... I can assure you of this gap being bridged at the time of Budget." To promote start-ups, the finance minister said the government is easing the process of doing business.

"Another very significant difference of what makes it a landmark event is a final break or the ultimate break that you have with the conventional licence raj of India," Jaitley added.

Jaitley said Indian economy could only partially break off from the licence raj in 1991. "It was partial because... there was an invisible role of state, control over land permissions, foreign investment proposal and of course, unless the political nod came to venture into newer areas which involved a lot of capital, a lot of energy going into it, an entrepreneur or investor was normally reluctant," he said.

Adhia further said some other tax incentives to encourage start-up ecosystem such as rationalising service tax rules are also likely to be announced in the Budget, to be presented on February 29.

Speaking at the same event, Economic Affairs Secretary Shaktikanta Das said the Finance Ministry has held detailed discussions with the Reserve Bank over online filing of returns under FEMA.

"You will see very quick action on that which will facilitate online filing of returns," Das said. Referring to starting a company in India as a "Chakravyuh", Das said: "It's easier to get in than to get out.' The Bankruptcy and Insolvency law, he added, will create a vibrant credit market in India and provide an exit option to entrepreneurs.

On steps taken by the government to improve regulations for start-ups, Corporate Affairs Secretary Tapan Ray promised that his department is working on a software in which registration of new ventures would be made possible in 24 hours in the next couple of months.

"As of now, there is some complaint that it takes a long time to register companies. So, we are going through an action plan to revise the rules... remove rules which are irrelevant for start-ups," Ray said.

Asked how easy it is for a new-age company to come and list in India, Sebi member Prashant Saran said stock exchanges have a start-up platform called Institutional Trading Platform.

Sebi has done away with the detailed object clause for listing of start-ups which is otherwise required to be disclosed by other companies launching an IPO.