Union Budget 2016 is out but Indian startup is asking for more sops. The startup world had reacted with muted enthusiasm to its budget showering mild praises on proposals. They were anticipating and urging the government to do more to remove burdensome tax rules.
Finance Minister Arun Jaitley kept the prime minister word on tax breaks on profits made by startups followed through on another promise by proposing companies law to make it simple to begin business.
These moves were anticipated and most Movers and Shakers in the startup community and were not excited by what they saw. “PM Modi set very high expectations for startups in his January speech,” said Ravi Gururaj said “The budget today is lukewarm at best for startups.”
In addition to permit 100% profit deductions in first three of five years for startups set up between April 1 and March 2019. Jaitley said investors in unlisted companies will be eligible for long-term capital Capital gains treatment in two years out of three years.
Venture Capital investors were asking to be treated on par with public market investors for whom the limit is one year.
Vijay Shekhar Sharma, the founder of mobile marketplace Paytm stated that while reducing the time frame for capital gains to two years is positive and will not be having any major impact because few investors will exit in two years.
A number of startups normally don’t make profits in first two years, tax breaks on profits may be useful. “Startups will still be liable for MAT (Minimum Alternate Tax), so the effective benefit is not likely to be very significant,” he said.
The NDA government and particular Prime Minister Modi has been eager to project a startup- friendly image engaging closely with founders and even coming up with its ‘startup India stand up India’ program to promote entrepreneurship. “The budget is semi-sweet with specific sops in continuation of earlier policy announcements made by PM,” it said.