The Union Budget 2017-18 came as a huge breather to the Indian startups. Moving ahead on the ruling government s ongoing initiative to encourage startups in India, Finance Minister Arun Jaitley, proposed to extend the time period for availing tax benefit for three years in the first seven years of existence of a startup company. Earlier the deduction was available for three years in first five years. Also Read - How to book COVID-19 vaccine slot via Paytm App, get Covaxin and Covishield shots with these simple stepsAlso Read - Alert! Paytm cashback scam: Fake Paytm website, it's a trick to steal your money
In his speech, the Financial Minister said, “…the profit linked deduction available to the startups for three years out of five years is being changed to three years out of seven years,” Jaitley said in his Budget Speech. Also Read - 5 apps helping people get through the COVID-19 second wave: Twitter, CoWIN, Aarogya Setu
Basically, the Financial Bill presented by the government states, that startups will now be allowed to compute their the total income for three consecutive assessment out of seven years beginning from the year in which such eligible start up is incorporated, earlier the period to claim deduction was set for any three consecutive assessment years out of five years beginning from the year in which the startup is incorporated.
In addition to that, for the purpose of carry forward of losses in startups, the condition of continuous holding of 51 percent of voting rights has been relaxed. However, this is subject to the condition that the holding of the original promoter/promoters continues. This comes as a relief to startups as they do not make profits in the first few years of operations. ALSO READ: Union Budget 2017-18: FM Arun Jaitley announces Aadhaar-based smart cards for senior citizens
Further, on the issue of removal of Minimum Alternate Tax (MAT), the Finance Minister said, “it is not practical to remove or reduce MAT at present.” “However, in order to allow companies to use MAT credit in future years, I propose to allow carry forward of MAT up to a period of 15 years instead of 10 years at present,” he added.
Besides, the minister proposed to reduce the income tax for smaller companies with annual turnover up to Rs 50 crore to 25 per cent, in order to make micro, small and medium enterprises (MSMEs) more viable and also to encourage firms to migrate to company format.
Many startups have welcomed the motion with open arms. For instance, Paytm founder and CEO really thinks the Union Budget 2017-18 is a digital economy budget. He explains every aspect of the proposal benefits works toward India s dream digital economy.
He believes that amendments like tax benefits, the incentives to use digital payments, and the government s effort to extend loans based on a digital footprint will create a larger merchant ecosystem for digital payments . ALSO READ: Union Budget 2017-18: Rail tickets booked online via IRCTC to get cheaper
He adds, Incentives for labour intensive sectors including housing, farming and dairy will help SMEs to create new jobs. Focus and attention to bank NPAs, as well as increasing bank capitalisation is great step towards strengthening the financial system of the country.
Finally, he talks about the Income tax-related amendments in the proposal, which he is sure will encourage more people to report their incomes and create a larger tax net for the country.
CEO and Founder of GOQii,Vishal Gondal, is convinced that the increased focus on digital penetration will make healthcare segment a lot more more affordable and accessible in the country. ALSO READ: Union Budget 2017-18: Smartphone prices in India to marginally increase
He said, Emphasis on improving Healthcare and Digital infrastructure of the country have been the key areas of focus for the government in this year s Union Budget. I believe that this digital penetration will also help healthcare become more affordable and accessible for the people in this country.
Talking about the Aadhaar-card based smart cards proposed for the older citizens of the country, Gondal said, … the government s move to consolidate it with the Aadhar Card is a positive sign as it shows that preventive healthcare is a priority for this government. To boost this sector further, government is trying to attract more investment and reduce the cost of medical devices. We are hoping that this benefit will be extended to the wearable healthcare segment too which has been propagating the concept of preventive healthcare in India.
He also commented on the income tax-related changes made, saying, … with the tax rebate for the startups, the government is ensuring that the future of the business lies with them. ALSO READ: Union Budget 2017-18: Rs 10,000 crore allocated for BharatNet; 1.5 lakh gram panchayats to be connected via optical fibre
While some commended the tax rebate, there are alter-opinions about it as well. Mayank Bhangadia, the CEO and co-founder of Roposo says, the 5 percent corporate tax reduction is not relevant to most startups that have not yet begun generating as much revenue. Government should now start thinking about how to reduce startups’ real cost in the early years. In my opinion, income tax slabs should be made completely flat. Tax rates should not increase with increasing income.
Sanjay Sethi, CEO and co-founder of ShopClues, also thought that the budget was short of expectations . He appreciated the government s move toward Digital India and the effort of financial inclusion, however, he think the proposal somewhere missed the point. He said, … the government has deployed lot more sticks rather than carrots too to push the less-cash agenda . ALSO READ: Union Budget 2017-18: 10 tech-related announcements made by Finance Minister Arun Jaitley
Sethi points out what he really expected from the Union Budget 2017-2018. He argues, I would have expected zero TDR for small value digital transitions. Investments in infrastructure, focus on Bharat & employment guarantee & women empowerment, political trans is welcome. Corporate tax break for SMES is very nice, and much awaited, it is important that Government recognizes SMES to be the engine of India s GDP growth. Incentive for Startup fell short of expectations. There is not much clarity around FDI, FIPB so let s see how it pans out in coming days.
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