Union Budget 2016: Expectations from Indian Startups

Indian Startup Budget Expectations

Unveiling of Union Budget is one such event that is keenly followed by Business Owners, be it small or large. The announcements made during budget shape the financial decisions of many!

With the launch of the ‘Start-Up India Campaign’ and a lot of focus on encouraging start-ups, curiosity has been built around what the budget will offer. How well the government will adopt and accommodate start-up friendly policies and initiatives.

Here are a few quotes from Founders of Startups on their Budget Expectations.

Mr. Sujayath Ali, CEO & Founder, Voonik.com

1. Reward Diversity in Startup workforce: Many startups are preferred places for women, as they get flexible timing, work from home and other benefits. Startups give women a great opportunity to fulfill their personal commitments without compromising success at professional front. I feel, government should encourage diversity, by giving certain tax benefits to encourage inclusion of women in startup workforce.

2. FDI in B2C Ecommerce: Currently there is a lot of confusion in terms of what constitutes B2C ecommerce vs. marketplace and where FDI is allowed. We expect clarity on FDI policy and definition of what entails a marketplace.

3. Removal of Angel / Startup Tax: We are awaiting clarity on the angel tax. While Finance Minister mentioned that provisions will made in the Income Tax Act for exemption to a notified class of investors, we are still awaiting details.

4. Staggered/Laddered Service tax: Even though a 3 year Income tax holiday is given to new startups, the issue of Service tax is not addressed yet. I hope in the new budget, some laddering like that of Income tax slabs is given to startups. This will help us in being able to invest a part of our revenues to business, reduce our dependence on VC funds and once we reach a certain stature we can definitely pay ST at par with other Listed companies.

5. Infrastructure: To make Ecommerce sector profitable, we need a robust delivery system. All ecommerce companies are struggling with delivery delays, package losses in transit etc. For customers, getting their order in time is the bare minimum expectation. On the other hand, for a company to deliver on time through polite courier boys, is a big challenge. Often many courier partners are not equipped to handle cash collected in delivery. In the new Budget, there has to be a more focused plan on improving road & rail infrastructure, so that companies like Voonik can profitably deliver the orders to our customers.

6. Financial innovation for easy credits to SME & small traders: One of the key challenge for our sellers face is the liquidity crunch when they have to suddenly scale up to cater to a huge online demand. I feel, the new budget should encourage NBFCs to create fast, easy and reasonable loans for the sellers who start selling through online retail.

7. Mobile Money: If in the new budget, government can announce rebates/ subsidies through Mobile money platforms, this will help us in encouraging prepaid order placing, thus reducing our cash on delivery handling costs.

Varun Dua, CEO & co-founder – Coverfox.com

“The key expectations from Budget 2016 is deregulation and allowing FDI in fin-tech. Most fin-tech businesses like payment banks / insurance have heavy dependence on domestic capital which is mostly risk averse and thus scarce.

The Budget should also  consider relaxation in structures which make private secondary transactions more liquid from a tax or complication perspective.” –

Pankaj Vermani, CEO, Clovia.com

“The E-commerce industry has seen a boom in 2015. To ensure that the growth continues the Union budget needs to provide greater tax clarity especially related to jurisdiction / taxability issues. We are also hoping for a positive clarification for the Central Sales tax on transactions such as cash on delivery, which involve inter-state movement of goods.In addition, today every region has different laws for eCommerce. To govern the sector better one needs better definition of the category and a centralized law.”

Rajiv Sharma,CEO and Co-Founder, dPronto

Start-ups face a lot of teething troubles; keeping this in mind we would like to see the removal of direct and indirect taxes on start-ups. Would even recommend a tax holiday for start-ups (just like that for IT companies during the 90s) for a period of 3 years. Removal of “angel tax” is equally important since Angel funding is crucial to foster the start-up eco-system in India at a time when banks and venture capital funds are pulling away from providing financial aid to such companies. Start-up companies require innovation to grow fast and hence compliance of stringent norms robs off the ingenuity of new beginners. We would like to replace audits with self-reliance certificates as proposed by Nasscom.

One of the pressing issue that most startup entrepreneurs are talking about is clarity in taxation on new businesses and startups. Government needs to definitely bring in more clarity in this budget!

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