-By Mr Vineet Rao, CEO & Founder, DealShare

“2021 was a historic year for the start-up eco-system, and maintaining this momentum will call for a comprehensive approach in the upcoming budget. Availability of finance, especially at the early stages is critical to the growth of any start-up, and hence the upcoming budget should look at universalization of Angel tax exemption. Currently, Angel tax exemption is only available to those who are recognized by the Department for Promotion of Industry and Internal Trade (DPIIT), and it will be ideal if the government finds common ground where maximum startups can avail this benefit. The government should extend it to start-ups that invest the capital received from investments in immovable properties and loans and advances, contributions made to other entities, jewellery, artifacts, or any mode of transport where the actual cost exceeds Rs. 10 lakh (aircraft, car, etc.). The exemption should also be extended to MSMEs and SMEs operating from rural areas, as many are at the early stages of their growth and do not have the means to complete the documentation process. The government should help the MSME sector by funding NBFCs to promote financial inclusion & maintain liquidity with a distinctive focus on the MSMEs under priority section lending as it will help them recover and accelerate the overall economic growth. Single point tax compliance is another reform that needs to be implemented. Start-ups do not have the budgets to hire large teams/consultants to manage the multiple compliances. Therefore, a single-point compliance ecosystem will significantly improve the ease of doing business. Expeditious start-up certification eco-system at the Inter-ministerial Board (IMB).

Early-stage start-ups securing services from foreign providers should be exempted from having to pay GST up to a specific revenue limit. The government can also provide a space where all the GST-related issues can be addressed as there is still a gap when it comes to clear understanding of the GST. Collateral-free loans and creating a conducive environment for domestic capital participation by reconsidering the enhanced surcharge on capital gains from unlisted shares relevant to resident individuals can aid the industry significantly. In the last few years, the government has launched multiple projects; therefore, the government should give a chance to the startup sector by relaxing the norms and providing them with a fair opportunity to compete with the big players. Further, a re-look at the policies that proscribe or prevent large enterprises, such as the LIC and pension funds, from investing in Alternate Investment Funds (AIFs) is also the need of the hour. Investor-friendly and liberal directions when it comes to IPO or direct overseas listings, exclusion of capital gains on new investments made by AIFs, infant industry status to small firms and start-ups attempting to enter the digital sector, making FDI norms flexible for domestic e-commerce startups, integration of stakeholders like policymakers, taxation authorities, and the Registrar of Companies into a single system, amending the FDI policy to widen the scope of group companies; and creating a separate law, especially to curb the difficulty of the customers who buy the goods/products through social commerce platforms; these are the other few areas that the government should consider addressing in the upcoming budget.”