Budget 2017 turned out to be the proverbial mixed bag for the startup community, meeting expectations on some fronts and falling short on others. While the lowering of taxes for MSMEs and tax holiday extension provided some cheer, many a startup felt it was mere tinkering that’s unlikely to bring any substantial benefits.
What most agreed upon, however, is that the emphasis on digitisation will strengthen the entire ecosystem, even as it presents opportunities in the fin-tech space .
Here is quick Look , How some of the start ups had to say about the 2017 Budget
Ajith Mohan Karimpana, CEO and Founder, Furlenco
This budget is a continuation on the path towards improving tax administration & compliance and increased emphasis on digital transactions; Similarly the attempt to clean up political funding is also commendable.
However, given the strong emotions that the Demonetization exercise evoked from the country at large and impending implementation of GST, the government refrained from bringing in any pathbreaking changes on direct taxes. Most of the proposals of personal and corporate tax have marginal impact for the tax payers.
Specifically coming to the extension of tax break for startups to 7 years, this change was definitely required as there are very few startups that actually generate profits in first 5 years of their existence; reduction in corporate tax rate for entities with turnover less than Rs.50 Cr may not be of much use for new age startups that take 5-7 years and much larger turnover base to turn profitable.
Overall on a scale of 10 we would rate the budget 6.5.
Aneesh Reddy, CEO and Co-founder, Capillary Technologies
As a retail and technology centric startup, we were hopeful around 3-4 high impact areas revolving around digitization measures, GST, corporate and individual taxation laws and differential duties on certain products.
It was heartening to hear about the Digital theme focused measures revolving around digital payments through BHIM app and Aadhar based payment initiatives. The referral bonus and the cashback schemes would further encourage cashless transactions by consumers and adaptability by merchants.
Although the Finance Minister, had suggested that GST bill will spur economic growth, we were hoping for an announcement on the implementation of GST bill starting this financial year. Overall, this budget has created the most positive impact as far as digitization measures are concerned. The digital transformation initiatives coupled with a spike in the digital transactions would encourage more startups like ours to play a vital role in innovating and significantly contributing to boost the digital economy in the country.
Anurag Avula, CEO and Founder, Shopmatic
“It’s agreeable to see positive reforms being proposed in favour of digital pay systems for the common man, more specifically in rural and semi-urban areas. The move for forming reduction on tax for small and medium enterprises’ is a boost to “The Make in India initiative”, that will encourage the nation to keep in lines with motivational 2017-2018 budget theme of Transform, energize and clean India.
It’s also great to see improvement on the high speed broadband connection in rural and tier 2 and 3 cities, which further nurtures the country’s tech essence.
What is interesting to note is the government’s interest in start-ups and on energising youth & creating jobs. The Profit linked-deductions for start-ups that has been reduced to 3 years out of 7 years, will certainly ease the process.
In all its completeness we are quite pleased with the start-up and SME announcements. We believe that the fresh moves made will cultivate the rising upsurge of tech and digital initiatives to further energize the GDP of our nation.”
Archit Gupta, CEO and Founder, ClearTax
The govt has proposed to abolish FIPB. This is a significant move for startups eco-system. The govt has proposed automatic FDI approval route. This is also a move towards ease of business – as obtaining FIPB approvals involved time and effort. This is an excellent move for removal of lengthy and time consuming approval processes. We are awaiting further details on this.
Sujayath Ali, CEO and Co-founder, Voonik
4 ways the Budget 2017 will benefit Startups
- Abolition of FIPB: Government has signaled clear and loud that it is committed to liberalizing FDI policy to attract more more investments. Once the FDI reforms are announced, they will not only attract fresh funds into the current startup ecosystem, but will also promote new ventures in many untapped or underserved sectors of economy.
- Merchant enabled Aadhar Pay system: Digital payments play a pivotal role in ensuring consistent customer experience and increasing verified transactions. New merchant enabled Aadhar payments will bring many new consumers who do not have a debit card, into the digital payment environment. This will help startups improve their user identification and engagement.
- Schemes to promote BHIM: Mobile penetration has still not peaked in the country. Even those who don’t have Pan card, have a mobile phone. Also a large consumer base of housewives, teenagers, dependent parents etc who are currently transacting on cash, will now be able to use linked accounts for transactions. This will further help startups to increase prepaid contribution to overall transactions.
- Income Tax rate for companies with turnover of over Rs 50 crore has been reduced to 25%: It will not impact tech startups and ecommerce companies directly. But it is a very positive move for the seller ecosystem. Lakhs of sellers are finding new avenues with the growing ecommerce industry in the country. These sellers will benefit from the government move and will be able to plough back money in further scaling up.
Vivek Mathur, CEO at Giftease.com –
Overall, the budget stays on the path of fiscal prudence, with no major populist measures or sops. Continuing strong emphasis on digital payments is particularly good for our sector, and necessarily needs to accompany remonetisation. Tax benefits to SMEs and individuals in the lower slabs should have some positive for consumption, but I believe the expectations were higher, particularly considering the measures to increase the taxpayer base. In terms of policy shifts, the easing of FDI is positive , but the details and schedules remain to be seen.
Vinamra Pandiya, CEO and Founder – Qtrove.com
The overall budget seems to be another big step towards a digital India and it is rightly so! A strong weightage for digital payments is principally good in the long run for the e-commerce sector. Tax relief to SMEs and revised tax slabs for individuals will surely promote more investment thus helping the economy grow. Policy changes with regards to ease of FDI are extremely encouraging and we are now looking forward to the suggestion made by the expert panel for the implementation of GST.