Tech and e-comm startups hail Budget 2017

By : |February 1, 2017 0

Sensex closed at a high of 486 points after ‘Union Budget 2017’ which means it has got a nod from the investors as well. The budget 2017 has set the goals straight as India takes head-on the challenging global economic environment.

The emphasis is rightly placed on the overall growth with a series of initiatives including higher allocation to infrastructure, especially rural infrastructure and also maintaining attention towards a transparent digital economy.

Furthermore, the housing and personal finance sector has received a significant boost from the announcements by the Financial Minister.

                                 

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Vijay Shekhar Sharma, Founder & CEO – Paytm said, “Tax benefits, incentives to use digital payments and extending loans based on a digital footprint will create a larger merchant ecosystem for digital payments. 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 capitalization, is a great step towards strengthening the financial system of the country.”

Here are a few high points from the budget as per the industry experts and various startup CEOs.

On Startups

In a major move, Budget 2017 announced that firms incorporated after 31 March 2016 could now avail a three-year tax holiday in the first seven years of their existence.

Although, FM Arun Jaitley refused to remove the Minimum Alternative Tax (MAT) but, allowed the companies to carry forward their MAT to 15 years from the present period of five years. This does give the companies an additional five years before they become liable to pay their MAT.

However, Mayank Bhangadia, CEO, and CoFounder, Roposo, has his concerns over the 5% corporate tax reduction. He says it is not relevant to most startups that have not yet begun generating as much revenue. He appeals to the government to 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,” he added.

When it comes to carrying forward of losses in respect of startups, the government has now relaxed condition of the continuous holding of 51 percent of voting rights. However, it is subject to the condition that the holding of the original promoter/promoters continues.

Kunal Bahl, Co-founder & CEO, Snapdeal welcomed the budget, “We commend the focus on growing the digital footprint in the country – enhancing digital infrastructure, capping cash transactions, reducing cash donations, using Adhaar Pay to enable more digital payments are significant measures. Initiatives make an impact when there is continued attention and the announcement of today builds on the demonetization efforts of last few weeks.”

Abolishing FIPB

Finance Minister announced that FIPB has had a successful implementation for e-filing and online processing of FDI applications. But now, we have now reached a stage where FIPB can be phased out. Therefore, they decided to abolish the FIPB in the year 2017-18. Roadmap for the same will be announced in the next few months.

Aakash Choubey, Partner, Khaitan & Co. feels, given most sectors are under automatic route, FIPB was losing its significance. He adds, the move to abolish it is positive and may give a fillip to FDI, but a lot will depend on a consistent roadmap that Government should lay down.

Archit Gupta, CEO, and Founder, ClearTax says, it is a significant move for startup ecosystem. The govt has proposed automatic FDI approval route. He adds, this is also a step towards ease of business – as obtaining FIPB approvals involved time and effort.

The abolishment is considered as an excellent move for removal of lengthy and time-consuming approval processes.

On Taxation Policy

For medium and small enterprises with an annual turnover of up to Rs 50 crore, the budget announced a five percentage point rebate on corporate tax to 25 percent from the earlier 30 percent.

Neelesh Talathi, CFO-Pepperfry.com, said, “The Indian furniture industry employs around 5mn people and over 85 percent operate in the unorganized sector. We are heartened with the Government’s investment in skill up gradation and tax relief for the MSME sector.”

Sunil Jose, Managing Director, Teradata India expressed his views on the same, “Finance Minister Arun Jaitley made several references to using data mining to improve the efficiency of the various tax departments specifically with regards to transforming India from a cash driven to a digital economy using new measures such as Aadhaar Pay.”

He feels this is a step in the right direction which will have a material impact in widening the tax base and make India fiscally stronger and have a positive impact on national growth and development.

For Digital Growth

The budget etched out very clear targets for rural infrastructure, as 150,000 Gram Panchayats will have Broadband connectivity by the end of 2017-18.

Bipin Preet Singh, Founder & CEO, MobiKwik, said, “Overall the Budget proposals look to boost consumption. However, we feel that the government must have also considered promoting startups in the digital payments and digital security areas. Secure digital transactions are the only way to sustain India’s habit of cashless payments. Computer emergency response team to be set for cyber security of financial sector.

Govt is to introduce two new schemes to promote BHIM App – referral bonus for users and cash back for traders. Aneesh Reddy, CEO, and Co-founder, Capillary Technologies, said “It was heartening to hear about the Digital theme focused measures revolving around digital payments through BHIM app and Aadhar based payment initiatives. The referral bonus and the cashback schemes would further encourage cashless transactions by consumers and adaptability by merchants.”

Although many feel that the Finance Minister, had suggested that GST bill will spur economic growth, they were hoping for an announcement on the implementation of GST bill starting this financial year. Overall, this budget has created the most positive impact as far as digitization measures are concerned.

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