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Great expectations: Biz world abuzz with Budget 2017 talks

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Budget 2016-17

With the Union Budget 2016-17 set to be unveiled in little over two weeks from now, business organisations across the Industry are expecting big from the budget day. They seem inclined to believe that a progressive NDA Government under the leadership of Prime Minister Narendra Modi will introduce more Industry-friendly measures than ever, especially with a focus on the startups.

The IT/ITeS sector is all the more excited in view of the series of programmes, including Digital India, Make in India, Startup India and last but not the least the Smart Cities Mission, which hold huge potential for growth of the software development companies and those into electronics manufacturing.

Making its pre-Budget recommendations for the startups and e-commerce ecosystem, the apex IT industry body Nasscom has said exempting startups from direct and indirect taxes, including MAT, will help reduce compliance burden and cash outflows for the new businesses.

It also strongly recommended companies that be allowed to carry forward losses even if there is change in ownership structure. “Policy regulations like ease of compliance, reliance on self-certification instead of audits, tax exemptions for startups will allow entrepreneurs to devote their time, energy and resources to build upon their innovative ideas,” said Nasscom President R Chandrashekhar.

With the number of tech startups in India growing at over 40 per cent the last year, these startups can potentially develop innovative solutions to address the development needs of the country, he added.

The industry body also felt that there is a need to rationalise tax rates for investors, as investments in early-stage startups are a high-risk proposition.

Capital gains tax be harmonised for resident investors with non-resident investors and tax rates for angel investors, Nasscom said. “Proprietary domestic capital should be allowed to set up an LLP as an investment vehicle and capital gains tax on income from sale of equity of a startup be exempted if the proceeds are reinvested in securities of new startups,” it added.

Referring to e-commerce, Nasscom pointed that it has emerged as a powerful instrument encouraging people to transact online, offering traceability and transparency.

“However, there are disturbing trends whereby states are considering taxing e-commerce transactions thus introducing barriers to technology adoption. Therefore, Nasscom has proposed a high-level committee to evaluate of emerging trends and technologies, which should be institutionalized to provide inputs and triggers for policy roadmaps,” it added.

 

INDUSTRY VOICES

Diwakar Nigam – MD, Newgen Software

Our exports are becoming more and more difficult owing to budget cuts, visa restrictions etc., all around the world. In order to make software companies stronger, there is a need for extending Special Economic Zone (SEZ) schemes and removing Minimum Alternative Tax (MAT). This will not only help Indian software companies, but also incentivise foreign companies to set up software development facilities in Indian SEZs and provide further employment opportunities.

Sujayath Ali, CEO & Founder, Voonik.com

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 forms a marketplace.

Abhishek Pandit, Director – Business Services, AISECT

Service Tax should be waved off from the Business Correspondents’ commission as the BC channel is trying to establish itself as a strong channel for financial inclusion, whether urban or rural. Once we see some acceptance of financial services in the target areas, then gradually a service tax policy can be introduced. However, at this stage in the financial inclusion scheme, this tax should be waved off immediately. To ensure that the Business Correspondent channel is financially viable, additional B2C services like provident fund, insurance, etc. should be provided through banking kiosks.

Varun Dua, CEO & Co-Founder, Coverfox.com

The key expectations from Budget 2016 are deregulation and allowing FDI in fin-tech. Most fin-tech businesses like payment banks/insurance companies have heavy dependence on domestic capital, which is mostly risk-averse and therefore scarce. The Budget should also consider relaxation in structures, which make private secondary transactions more liquid from a tax or complication perspective.

 

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