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Budget Expectations 2016: Online Service Tax Relief, GST, IPO Policy support & more

Bhavin Turakhia

Budget

 

India’s finance minister Arun Jaitley will present his second full-year budget on February 29. We ask India’s digital biz companies what they expect from the current budget:

On easing taxes

NASSCOM: For certainty in tax regime, a clear roadmap for rationalization of corporate tax rate to 25%, abolishing MAT or rationalizing the rate to 1/3rd the corporate tax rate and associated road map for utilizing MAT credit, rationalization of education cess and surcharge to bring down effective corporate tax rate should be made available.

Sujayath Ali

Sujayath Ali

Sujayath Ali, Voonik: Even though a 3 year income tax holiday is given to new startups, the issue of service tax is not addressed yet. I hope in the new budget some laddering like that of income tax slabs is given to startups. This will help us in being able to invest a part of our revenues to business, reduce our dependence on VC funds; and once we reach a certain stature, we can definitely pay service tax at par with other listed companies.

Ankita Tandon, CouponDunia: A sure way to help early-stage startups pick up growth would be to increase existing tax exemptions – currently a service tax exemption exists for commissions earned up to Rs 10 lakh a year, this exemption should be extended to commissions earned up to Rs 25 lakh.

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Sudarshan Purohit, Zenify: 100% tax holidays on direct (corporate, MAT), indirect tax, surcharge tax for the first 3 years.

Brijesh Agrawal, Tolexo: Revamping service tax and VAT to bring down tax compliance and cash outflows.

On GST

Avinash Shekhar, Urban Ladder: A clear and time bound roadmap and implementation to GST should be one of the primary considerations. Clarity on taxability of inter-state transactions under current regime will benefit companies like us. This will facilitate ease of doing business in India.

Dinesh Goel, AasaanJobs: Most eyes would be on the bankruptcy bill as well as the GST bill, since these would be pivotal towards freeing up red tape and allowing businesses to adopt a more flexible model catering to the market. This would not only create a demand for new job roles in the services and manufacturing sector but also give companies the green signal to scale up their recruitment and grow fearlessly.

On FDI

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Sujayath Ali, Voonik: 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 entails a marketplace.

Proper utilization and easy access to funds

Bhavin Turakhia

Bhavin Turakhia

Bhavin Turakhia, Directi: Enacting regulations that ensure the optimal utilization of the USO Fund: This should be to overcome the infrastructure barrier and enhance the reach of broadband connectivity in rural locations.

Ankita Tandon, CouponDunia: The announcement of a $1.5 billion start-up fund during ‘Startup India 2016’ is definitely a boost, though we would like to see how these funds are channelized towards us, and would want a clear and quick way to access them, with minimal government or bureaucratic intervention.

Sudarshan Purohit, Zenify: We expect the allotment of special funds for the start-ups and “Credit Security Bond” from the government which can be a security to receive an initial loan from the banks.

Tax Relief on affordable Smartphones

Shankar Nath, Paytm: We would also like to see tax breaks on budget smartphones which support vernacular languages. Tier 2 and 3 cities and rural India thrive on smartphones, and have contributed significantly to productivity. The more the smartphone penetration, the higher will be the levels of entrepreneurship that we will see.

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Make it easy to go public

Sanjay Sethi, ShopClues: Policy support for start-ups that are trying to list themselves with an IPO is another major expectation of companies that have done well and are now looking at further cementing their market standing.

Mukesh Singh, Zopnow: Policy framework on supporting startups trying to list themselves with an IPO, would be [among the] few of the things we are looking forward to in Budget 2016.

Make working with startups attractive through incentives

Sujayath Ali, Voonik: One of the key challenge for our sellers is the liquidity crunch when they have to suddenly scale up to cater to a huge online demand. I feel the new budget should encourage NBFCs to create fast, easy and reasonable loans for the sellers who start selling through online retail.

Ganesh Vasudevan, IndiaProperty

Ganesh Vasudevan

Ganesh Vasudevan, IndiaProperty: Capital gains tax for ESOPs and angel exits should be made at par with public market investments, encouraging angel investments for startups and increasing the upside for employees of startups.

Sumit Khandelwal, Giftxoxo: Implementation of PF/ESI/PT/gratuity etc. to not be applicable in first 2 years of start-up as cash to employee is more critical than CTC.

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Tax Rebates on Digital Transactions

Ashish Kashyap, ibibo Group: The government should focus on incentivizing and promotion of online payments by offering tax rebates to consumers making use of digital payment options. There should also be tax advantages to merchants who make high value transactions mandatory to be made digitally. This will also result in curbing the black money issue that the government is trying to tackle.

On Real Estate

Sumit Jain, CommonFloor: The [Realty] sector expects a single window clearance system from the budget so as to reduce time and cost involved in getting permissions between various departments. It is estimated to account for nearly 25% of the cost paid by the buyers. The sector also hopes for more clarity on the ‘100 Smart Cities’ scheme and the budget to be allocated for each smart city to be developed. As stated in the Real Estate Bill, the government needs to set up a Real Estate Governing body at the earliest which will look into the concerns and issues within the sector.

On Digital Advertising

Raghav Bahl

Raghav Bahl

Raghav Bahl, The Quint: We need only two things: one, more bandwidth/spectrum; and two, a level playing field on taxes. Why should a rich, old, viable, lucrative medium like print advertising be exempt from service tax, while the fledgling, entrepreneurial, technology driven Internet advertising is skimmed?

On Internet of Things and Wearables

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Rahul Nanda

Rahul Nanda

Rahul Nanda, Gubloos: Lower customs duty on import of IoT, wearable devices and components. Also, some tax benefits or relief for safety devices & services for women & children.

Mohammed Hussain Naseem, GetActive: Digital startups like GetActive, which has software & hardware components, plus program management, would expect duty refund on hardware components/products upto a revenue turnover of Rs 10 crore. Government should enhance the service tax limit upto Rs 2.5 crore from Rs 10 lakh. And start a VAT exemption similar to service tax upto Rs 2.5 crore.

***

Image Source: The Blue Diamond Gallery under CC BY-SA 3.0

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