Anushruti Singh
Ahead of the Budget 2024 scheduled for later this month, the Department for Promotion of Industry and Internal Trade (DPIIT) has suggested eliminating the controversial Angel Tax for startups, according to DPIIT Secretary Rajesh Kumar Singh. Additionally, the department has proposed addressing the inverted duty structure and reducing high tariffs on inputs in sectors like electronics. Meanwhile, most companies are looking ahead for some additional measures on tax structures and subsidies.
With these potential changes, several startup founders have shared their expectations and hopes for the upcoming budget.
Tax measures is a big demand
With startups hoping for more ease of doing business with Modi 3.0 government, tax measures seem to be the number one demand of the startups companies irrespective of the sectors. Most companies are anticipating startup friendly policies and some relief in taxes and GST rates.
“We are hoping for the same things as were with the interim budget in february,” says Amjad Raza Khan, CEO of Cashaa, a fintech firm.
“We want rationalisation of capital gains tax down from the current 30 per cent and of the TDS tax rate of 1 per cent. Treating crypto at par with other financial asset classes like equity. A well-defined regulatory framework for crypto in the country, making crypto a suitable investment option for the common man as well as spurring industry investment in the crypto sector,” he says.
Also expecting a good budget, Rahul Garg, Founder and CEO of Moglix says, “For the manufacturing sector, streamlining regulations, tax breaks, and infrastructure investments will boost efficiency and empower startups to compete globally,”
In addition Garg feels, Leveraging India’s strong economic growth and fiscal responsibility, the 2024-25 Budget can become a catalyst for innovation in AI, deep tech, and manufacturing. Increased R&D funding in AI, alongside clear ethical guidelines, is crucial to establish global leadership in this transformative field.
Pharma and healthcare stakeholder, Dr. Harshit Jain, Founder & Global CEO, Doceree is also looking forward to tax cuts. “Budget 2024 is a defining moment for the pharmaceutical sector in India. We look forward to robust support toward R&D and innovation through higher fiscal incentives and reduced GST on critical inputs to spur growth, foster technological advancement, and further fortify India’s leadership in global healthcare.”
Rohan Bhargava, Co-Founder at CashKaro is expecting some action on the angel tax. “Startups are also calling for the complete removal of angel tax regulations to foster a more conducive investment environment. Furthermore, AI-related regulations should be addressed at the earliest to ensure that as a country, we don’t hit bottlenecks in innovation and growth. Startups prefer self-regulation over stringent guidelines, which can stifle creativity and rapid development in this crucial sector,” he says.
“Pro-MSME policies are also vital. Simplifying the regulatory framework, providing tax benefits, and creating infrastructure for logistics and digital payments are necessary steps. Overall, keeping operational costs low for MSMEs through such measures will support their sustainability and growth,” he adds.
Measures to boost consumption
To stimulate consumption, industry players suggest offering tax relief, especially for lower income brackets.
“Rationalise and simplify the tax system to improve compliance and promote investment. Consider measures such as reducing corporate tax rates, phasing out tax exemptions, and broadening the tax base to make the tax regime more efficient and equitable,” Assocham said.
Mayank Gupta, co-founder and COO of Zopper Insurtech said the Budget is expected to focus on policies to promote economic growth and offer relief especially for the lower income brackets to stimulate consumption.
“From the point of view of insurance, we suggest amending section 80C of the Income Tax Act to permit a greater limit on insurance premium payments, thereby encouraging more individuals to buy insurance products.
Additionally, there should also be an allowance of deduction for term life insurance under the new tax regime,” he said.
Bhargava of CashKaro has similar hopes, “The current tax rate for earnings above ₹15 lakh stands at 30 per cent, which is quite steep. The significant jump in tax rates from ₹3 lakh to ₹15 lakh highlights the need for a more gradual increase. Raising the income threshold before any tax is levied from ₹3 lakh to ₹5 lakh would provide individuals, especially those in the lower earning bracket, with more disposable income. This change would boost consumption, increase savings for the middle class, and provide positive momentum for the e-commerce industry,”
Rate reduction on business loans
Startups are optimistic about the government’s commitment to building the flourishing start-up ecosystem in India. However, they grapple with finance challenge most. Founders anticipate much needed resolution for ease the way for finance capital issue.
“I anticipate that there would be significant initiatives towards better tax structures, easy and simplified access to capital, decrement of interest rate on business loans (expected up to 4 per cent) and incentives for technology as well as process innovation,” says Abhishek Vyas, Founder & CEO, of My Haul Store.
Ayush Gupta, CEO & Co-founder of Swopstore expects the same. “To boost startup culture, we anticipate the government’s proactive stance on facilitating easier access to funding with potential interest rate reductions of up to 4 per cent. Incentivising technological advancement and innovation processes will be key. Prioritising digital infrastructure and skill development is essential, alongside a firm commitment to sustainability, global collaboration, and digital transformation initiatives for a thriving startup landscape,” he says.
Encouraging sustainability
With India inc getting serious on sustainable operations, startups are seeking measures and policies around sustainable practices. Siddharth Dungarwal, Founder, Snitch, a stakeholder from retail sector hopes for policies that encourage innovation and sustainable practices.
“We want, simple regulatory procedures, creating technology infrastructure, skill promotion and other measures that can increase ease of business and Make in India initiatives, especially for Indian startups could spur more innovation, growth, and sustainability in the retail apparel and fashion industry. Also, we are keeping an eye on how the government is going to further promote its Initiatives while addressing opportunities and barriers for manufacturers looking to enter international markets,” he says.
Similarly, Yug Bhatia, CEO of ControlZ, hopes for policy framework for defining standards, certifications, warranties, and taxes is crucial for the growth of the refurbished smartphone industry in India.
“We predict a reduction in the GST rate to make refurbished devices more affordable and accessible to a wider audience. We are also expecting that the government will boost credit access and financing options, along with collateral-free and low-interest loans to the refurbished smartphone players. We propose that the government provide tax benefits and subsidies to the refurbished smartphone players who invest in R&D, AI to promote innovation and technology adoption in this sector. Lastly, we advocate for a focus on the circular economy and its environmental benefits, viewing it not just as a business opportunity but as a collective responsibility to make this sector more organised,” he says.
As Budget 2024 approaches, startups across various sectors are united in their call for tax relief, regulatory simplification, and supportive policies to drive innovation, growth, and sustainability. The government’s response to these demands could shape the future trajectory of India’s burgeoning startup ecosystem.
