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Simplified taxation, incubation centres, tax sops: Startups' wishlist for Union Budget 2017

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Simplified taxation, incubation centres, tax sops: Startups' wishlist for Union Budget 2017

The government is expected to layout the financial policy for the next year as it comes out with Budget 2017 on February 1. Since the Modi government assumed power, though sentiment was highly positive at the start of the new regime, and, in many cases , still continues to remain so, there are also those who feel that the positive sentiment did not result into any tangible business growth. Over the past few months, the aggressive demonetisation drive has further caused confusion and upset business forecasts for many.

Among policy decisions, the government has been quite vocal about its commitment to helping out Start-ups and SMEs and the industry will expect this attitude to continue for the foreseeable future while also providing impetus to other government initiatives like Make In India and Digital India.

 “There is hope that there will be some incentive announcements to further popularise the digital initiatives of the government. Being a pure ad tech firm we are very optimistic on the government’s vision of ‘Digital India’. We expect to see a growth oriented budget on February 1, 2017. The government has been encouraging entrepreneurship among the younger generation with its flagship initiative - ‘Startup India’ and keep up the momentum this time as well. More entrepreneurs in the ecosystem will drive sustainable economic growth and generate more job opportunities,” said Ashish Shah, CEO and Founder of Vertoz Media.

 Bhavin Turakhia, Co-Founder and CEO, Directi, feels the time is ripe for the government to initiate steps that will help start-ups tide over the immediate effects of demonetisation. “A startup hub; India is currently home to the third largest number of technology driven startups in the world. The previous year witnessed multiple markdowns in the country’s startup ecosystem and, therefore, to propel this forward, the PM’s flagship ‘Startup India’ project should receive an impetus in the upcoming budget,” he added, echoing views held by a number of entrepreneurs.

So what are the expectations that start-ups have from the upcoming budget? For one, says Varun Rathi, Co-founder and COO of Happay, the government should introduce 10 per cent tax rebate on incremental earnings year over year in digital forms for all SMEs, removal fuel surcharge of 2.5 per cent and introduce working capital/SME loans at 1 per cent lower rates based on the amount of digital acceptance.

“As digital payments take off, we'd like this year's budget to focus on financial inclusion. We hope the Government of India reduces indirect taxes and charges levied on digital transactions. Further, income tax incentives should be provided to people who use digital payment options. It's also time that digital payment and documents be treated legally on par with physical instruments. We also hope that the Government increases the ceilings on employee tax benefits as they're now quite overdue. To aid merchants, the Merchant Discount Rate on card payments should be abolished. The industry can also benefit from tax incentives provided to organisations operating in the digital payments space,” said Ramki Gaddipati, CTO & Co-founder of Zeta.

Speaking of taxation policies, Dushyant Jani, Founder and CEO of Mobclixs Technologies, pointed out that it has become imperative to improve India’s taxation structure.

“Firstly, though income tax exemption has already been declared for the first three years, involvement of GST will make tax structure easy to understand with fewer bifurcations. Ideally, simplifications of tax rules with new and improved communication with latest technology can boost the telecom operators and VAS companies and can reach out to millions of consumers with just one click. Moreover, raising funds for seamless internet connectivity across the country will make the 'Digital India' dream come true. Lastly, setting up of start-up incubators in various institutions will help the entrepreneurs change their business models to a profit making venture with less expense and more confidence. This in turn will help profit the Indian economy and make it stand tall," he said.

The online services sector has possibly been the fastest growing sector in the country in the last 2-3 years. Despite this, we have seen a number of companies in this space shut shop due to cutthroat competition.  With a significant market share to still reach, competition increasing every day and ongoing policy struggles, the sector has been in the firing lane and has seen layoffs and closures throughout 2016 and would hope for some respite in the budget.

"The government’s focus on speedy implementation of digitalisation supports long-term economic growth. All eyes are now on the Union Budget for clarity on taxation policy and regulatory issues, and fixing norms for the credit guarantee scheme. We hope to see supportive policies for the travel and tourism sector,” said Ritesh Agarwal, Founder & CEO of OYO.

 “Infrastructure development is a pre-requisite to provide the much-needed impetus for the industry’s growth. Additional incentives should be provided for infrastructure investments in the travel and tourism sector to accelerate growth. A lower tax rate for hospitality business and lower rate of interest for real-estate development will ensure opening up of more supply for the nascent branded budget hospitality sector. This will be in line with supporting small owner-friendly policies, such as the exemption of service tax in the sub-Rs. 1000 hotel room category," added Agarwal.

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