India has witnessed the transformation of various Indian companies starting as small ventures in the 1980s and 1990s becoming international brands. Twenty first century India is seeing the drive for self-employment becoming profound in the form of budding entrepreneurs.
However, in the absence of required support from the government, the young Turks in India had to wait for the business-friendly environment in the country, resulting in the gradual growth of the number of successful start-ups. It is in 2015 that a milestone moment arrived when Prime Minister Narendra Modi announced a dedicated scheme for start-ups in the country.
After a successful focus on giving thrust to start-ups in last 5 years as explained by us in one of our earlier articles, the Modi government in its first budget of the second term has continued with its ease of doing business agenda.
Here are some of the initiatives announced in the Budget 2019.
Resolving the Issue of Angel Tax
To resolve the issue of angel tax, the government has announced that start-ups and their investors, who file requisite declarations and provide information of their returns, will not be subjected to any kind of scrutiny. The Finance Minister had also said that the identity of those investors putting money into start-ups will be established by a new simple process of e-verification. Many start-ups have been served notice under Section 56(2)(vii-b) of the Income Tax Act 1961, a section that was introduced in 2012 by the UPA government. With the recent announcement, start-ups will breathe easier.
The capital-gain holiday for 2 more years – Under Section 54 GB of Income Tax Act 1961, exemption of tax on capital gains made by selling a residential property and investing the sum in equity share of a start-up company was available until 31 March 2019. In Budget 2019, this has been extended to 31 March 2021.
Carrying Forward the Losses and Setting-off Tax Liabilities
The Finance Minister, in her Budget 2019 speech, has also announced relaxation in norms for carrying forward losses from the previous year and setting-off tax liabilities once start-ups turn profitable. This will allow young entrepreneurs to survive immediate losses and have longer staying power even when their venture is not making profits.
An Exclusive TV Program for Start-ups
An exclusive TV program on the state-owned bouquet of DD channels has been announced for start-ups to serve as a mode of communication to discuss subjects like growth, funding and strategy of start-ups. While at the outset, this may not seem an important step to urban citizens, it is to be noted that Tier-2 and Tier-3 cities have been hubs of start-up activity as well. It is in these places that the idea of start-ups and knowledge about the start-up ecosystem would be needed. That is what this TV outreach will be a good medium for.
New Opportunities for Start-ups in Agro-Rural sector
80 Livelihood Business Incubators and 20 Technology Business Incubators are to be set up to develop 75,000 skilled entrepreneurs in agro-rural industries. This is a significant decision as far as start-ups ecosystem in the country is concerned. There is a huge scope for linkages and value addition opportunities in the agriculture sector, a good breeding ground for start-ups.
Thus, the Budget 2019 not only gives a further boost to entrepreneurs in the country but also to job creation.