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Tax incentives welcome, but more measures needed, say startups

The Startup Community Reacted Positively To The Tax Incentives Announced In The Budget, But Feels The Government Has Not Done Enough To Address Their Near-term Concerns.

PTI | Updated on: 29 Feb 2016, 09:24:34 PM


The startup community reacted positively to the tax incentives announced in the Budget, but feels the government has not done enough to address their near-term concerns.

They added that investors would have benefitted if capital gains on investments in listed and unlisted companies were treated at par, even as they welcomed the three-year tax exemption for startups. This will reduce compliance burden and cash outflows, allowing new ventures to invest in product development and scaling up businesses, they said.

“We were expecting more radical reforms in the Budget for startups. While we welcome the the three-year tax holiday, the fact that the Budget has retained MAT negates much of the advantages, as we have cash-flow problems in initial years,” said Ravi Gururaj, chairman of Nascomm Product Council.

He also said capital gains tax on investments in listed and unlisted companies have not been treated at par, which makes it unattractive to invest in startups that are already more risky.

Travelkhana CEO and Co-Founder Pushpinder Singh said, “The Budget has been quiet on certain aspects (like GST) although some future actions have been promised. We would have to wait and watch out for those initiatives.”

Jewellery and fashion accessories e-tailer Voylla’s founder Vishwas Shringi welcomed the proposal of one-day speedy registration of companies, but added that imposition of 1 per cent excise duty on branded jewellery is a dampener.

Indian Angel Network co-founder Saurabh Srivastava said while exemption from capital gains tax was expected, it would have been beneficial if capital gains tax regime for unlisted companies was aligned with that for listed companies, at least for investments made by Sebi registered alternative investment funds.

“This would end the discrimination against domestic venture capital funds as foreign funds anyway pay no capital gains tax by investing from Mauritius and other treaty friendly countries,” he said.

In order to encourage indigenous research and development, the Budget proposed to put in place a concessional taxation regime for income from patents.

Industry think-tank iSpirt Foundation said it will encourage companies to file more patents in the country, but said taxation rules should have been simplified.

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First Published : 29 Feb 2016, 09:17:00 PM