What startups want? #Budget2020

It’s been established that startups are the key economic drivers in India, but does the current economic scenario weigh too heavy on this industry? With the overwhelming discomfort on the taxation front, and the challenges with domestic capital flowing into the ecosystem, shouldn’t the government take the extra mile to support the wild ones who take the road full of risks and challenges?

The wish list of most startups, for the #Budget2020 read:

  1. Removal of double taxation on ESOPs

  2. TDS reduction to below 10%

  3. Faster processing of tax refunds

  4. Public listing norms to be relaxed

  5. Simplification of tax-related compliances

  6. Benefits programmes for MSMEs (Micro Small Medium Enterprises)

  7. Implementation of the zero-MDR scheme

All of these would lead to the government increasing its efforts in making India a hub for innovation.

#ESOPlikeAmerica – The long-pending demand

The current state of ESOPs in India is dis-incentivising the people working in and for startups, while the effort should be in encouraging the industry, the government was expected to pull a few levers and unveil some confidence-building measures. The premature tax that people pay while exercising an ESOP is too high! And a majority believes that taxes should be levied only during liquidation because sometimes even the weatherman doesn’t know which way the wind blows.

“At ShopX we have purposely designed an ESOP policy that exercises long periods to avoid premature taxations” – Amit Sharma, co-founder and CEO of ShopX. This practice has helped in employee retention and hiring.

 

‘Not so domestic capital’

Despite the norms that were rolled out in #Budget2019 there isn’t enough domestic capital in the Indian ecosystem. How much of the tax issue gets into the domestic capital scenario? Ritu Varma, managing partner at Ankur Capital feels that the taxation policy plays a vital role in the inflow of domestic capital in the country and the fact that these laws push a startup to opt for registration in other countries, due to very high taxes within India.

 

The times they are a-changin’

“From a time where if you were an entrepreneur, it was hard to get married to a time where toppers from IIT want to be entrepreneurs, India has come a long way! The Indian government is progressive with the wonderful work that NPCI has done to form public standards around payments.

The intent with digitization and processing of taxis in the right direction, the trouble remains at the ground level, the real deal is when a high transaction platform like ours stands responsible for the taxing status of our buyers. I feel a well-intended direction, some execution depth and finesse of how taxes are managed would be helpful for the Indian startup scene.

To know more about the expectations that startups had with #Budget2020 watch the entire interview by Young Turks: https://youtu.be/SisNEbLZyLE 

 

In the next blog, we share our reactions on the second union roll out from our finance minister, Nirmala Sitharaman.

#Budget2020 #IndianEconomy #StartupsInIndia #IndianStartups #ESOPs #GST #TDS #PrivateBanking

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