Kanika Agarrwal, Co-founder of Upside AI:-

“This budget was great because it spoke the language of new India and looks to the future. Plenty of buzzwords – Drones, blockchain, crypto, green energy, startups. But it was more than just lip service as the FM’s speech relays the governments willingness to work with emerging sectors. Moves like addressing crypto uncertainty,  digital rupee, investment in green energy, committee for startups, limiting surcharge on LTCG are all positive not just for the policies themselves but also for the signal the government is giving us. Focus on infrastructure, the LIC IPO, updating the IBC are continuing themes from last year. We hope to see more execution on these this year. Overall, budget continued to signal intent and direction for the government which was positive. Negative was the lack of tax cuts or relief for consumers and businesses who have suffered greatly in the last two years.”

Mr. Edul Patel, CEO and Co-founder, Mudrex- A Global Crypto Trading Platform:-

“The Finance Minister, Nirmala Sitharaman, has suggested 30% taxation on crypto gains. The losses if any cannot be offset against other income. Additionally, the introduction of TDS on crypto transfers can now monitor the crypto transactions. On sale of digital assets, 1% TDS would be applicable. Besides taxation on digital assets, India will soon have its blockchain power digital rupee. The digital asset classification will consist of crypto, NFT, and the government issued currencies. It is undoubtedly a progressive step towards boosting crypto adoption in the coming years.”

Mr. Milan Ganatra, Founder & CEO, 1SilverBullet:-

“Firstly, I would like to express my appreciation and welcome the Budget presented by the government, which has been tremendously encouraging for India’s startup ecosystem. Bringing in the unlisted equity taxation at par to the listed, will encourage more Mergers and Acquisitions (M&A) in India, allowing a substantial quantity of wealth to flow into the pockets of founders and investors, bettering the appeal for investors to invest in unlisted equities or startups in the country. The administration is also proposing to form a committee to develop a framework for attracting more investments and monitoring regulations, which is a wonderful step forward from the eyes of the Fintech startup entrepreneur.

Finally, opening various things at the Indian Financial System Code (IFSC) will allow it to become a worldwide financial services centre, fueling a slew of Fintech-related operations. The government has been extremely pro-infrastructure, and they have granted industry data centres status, which is a great move with multiple benefits. Overall, the government has recognised the importance of technology, startups and has assured that there will be adequate and more entrepreneurial opportunities, which will be backed up by government assistance.”

Mr. Harsh Bhuta, Partner at Bhuta Shah & Co LLP:-

“The launch of the digital rupee, which is a digital form of Fiat currency backed by blockchain is encouraging, but we will have to wait for the Crypto Bill to see the Government’s stance on other private Cryptocurrencies. The Budget, on the other hand, has included a new plan for taxing virtual digital assets such as cryptocurrencies and NFTs. The proposed section 115BBH seeks to specify that where an assessee includes any income from the transfer of any virtual digital asset, the income tax shall be 30% after deducting the cost of the acquisition of such asset. No other deduction in respect of any expenditure or allowance or set-off of any loss shall be allowed while computing income from the transfer of such asset. Further, no set-off of any loss arising from the transfer of virtual digital assets shall be allowed against any income for the current year, and such loss shall not be allowed to be carried forward to subsequent assessment years.

Further, TDS u/s 194S is provided for at1% on payment for the transfer of virtual digital assets to a resident > Rs 50,000 with certain conditions.”

Mr. Jitendra Suvagia, Partner, Bhuta Shah & Co LLP:-

Provisions to nudge the taxpayer for voluntary compliance

Under the existing provisions, a taxpayer is required to file income-tax return before the end of the subsequent financial year. Given the voluminous transactional data collected by the Government from different sources, the Government feels that the taxpayer may miss out reporting income from a few transactions due to limited time granted under the existing return filing provisions. In such a case, the Government has proposed to provide an extended time limit to file an updated income-tax return. The gist of newly proposed provisions is as under:

1.            An updated return can be filed within 3 years from the end of the relevant financial year.

2.            The opportunity is available to all taxpayers, irrespective, whether they have filed their return or not. However, the avenue is not available in following scenarios

2.1.         To claim losses remaining to be claimed

2.2.         Decrease tax liability, or increase the refund due, as per return already filed

2.3.         Taxpayer is subjected to search, seizure or survey by the Taxman

2.4.         Taxpayer has already filed an updated return once for a particular year

2.5.         If the assessment or reassessment is pending or completed for the relevant year

2.6.         The Taxman has information on the person’s income from specified sources and the same is communicated to the taxpayer prior to due date of filing updated return

2.7.         Any prosecution proceedings are initiated against the taxpayer for the relevant year

3.            Taxpayers are liable to pay tax and applicable interest before filing the updated income-tax return. Further, additional tax ranging from 25-50% of the aggregate tax and interest, depending upon the timing of filing the return, is required to be paid along with the updated return

4.            Time limit for regular scrutiny assessment pursuant to filing updated return is 9 months from the end of the financial year in which the updated return is furnished

While the newly introduced provisions provide extended time to genuine taxpayers who have missed reporting any particular income, a high overall tax rate may weigh in for a taxpayer to decide on voluntary compliance.

Factoring the base tax, surcharge, education cess, interests and additional tax, the gross tax of additional income reported in updated tax return could exceed 50% of the reported income. Such high tax incidence may act as deterrence for taxpayers. With increased digitization of transactions, use of big data analytics to trace evaders, the taxpayer is bound to land in the long arm’s of the taxman, sooner than later. Thus, considering the high tax applicable on undisclosed income detected by the taxman, penalty and prosecution involved, the 50% tax rate seems to go with the Department’s slogan, “Pay tax Karo relax”.

However, additional tax could be a burden to genuine small taxpayers, who are stressed to catch up with high inflation. Hence, it is recommended to reduce the additional tax in case of small taxpayers, who miss out on nominal incomes such as bank interest. The Government could introduce threshold limits to address this.

Mr. Shashank Khade, Co-Founder & Director, Entrust Family Office:-

“This is a Budget that is focused on prioritising capital expenditure as a key lever for growth, which we endorse as an approach given the multiplier effect of many of these investments. In that sense, the budget augurs well for the economy and the continuing decline in revenue expenditure as a share of total expenditure towards capital expenditure improves quality of expenditure.  To put it in context, the 35% increase in capital expenditure, 55% increase in Road sector allocation and 17% increase in railways are significant numbers.  On top of this is support to state governments towards capex. Of course, execution of projects in these areas and in urban infrastructure is key towards enjoying the full benefits of this expenditure.  The other point to note is that a larger share of defense capital expenditure is targeted to domestic procurement that could also have second order implications for R&D and multiplier effects in the economy.

The Budget is extremely future-oriented.  Emphasis on digitisation of government processes, incentives for startups enabling flow of capital (lower capital gains for venture investments), clean energy enablers for fundraising and PLI, categorising data centres and energy storage systems as infrastructure, recognising gaming as an area of potential, and a general focus on sunrise sectors is evidence of this.   Impact of this will be felt over the next decades and not in the short term. The taxation on cryptocurrency while at the same time talking about a digital rupee indicates the government recognition of block chain as an important future technology to enable.

The gross market borrowing through G-secs for 22-23 at Rs 14.95 lakh crs is higher than the amount expected by the market and has led to sharp increase in G-Sec yields. However, tax buoyancy is very high and could well surprise on the upside thereby leading to lower fiscal deficit in the current and coming year than forecasted.  However what quantum of issuance would be issued as sovereign green bonds and whether it shall be issued to a new set of investors (viz Foreign Institutions) is a key part we can watch out for. Overall, the credibility of numbers is very high as is evident in the tax growth rates and PSU divestment numbers being very moderate.  Indicative of an intent to under promise and over deliver.”

Mr. Harshil Salot, Co-founder, The Sleep Company:-

“The budget announced by the government today has been an incredibly encouraging one for India’s startup ecosystem and is an encouraging indication of the future roadmap of India’s digital transformation. As a made-in-India startup, the ECLGS 1 year extension is a great initiative that can aid SMEs to help sustain some semblance of normalcy and business momentum in these challenging times. Furthermore, the launch of the 5G spectrum can be a game-changer in increasing the speed of digital transformations across different spheres;  specifically for the D2C ecosystem that has y-o-y been making significant in-roads into India’s heartland, connecting more consumers to products and essentials that they otherwise would not have access to.”