Expectations of Indian Startups from the Budget 2018

By:Vandita Jadeja 2018-01-28

Finance Minister Arun Jaitley is all set to present the Budget on 1st February which is the last full-fledged budget before the elections in 2019. The growing number of startups across the country has high expectations from the budget. The Budget in 2017 made it easier for setting up of a startup and also provided income tax holidays to the same. There was a relief to the MSME sector and a tax reduction from 30% to 25% for companies that had a turnover less than INR 50 crore. The Budget had also given a push to digital transactions. The startup community in India expects significant issues to be resolved in Budget 2018.

  • On the taxation front, there are expectations that the limit under Section 80C will be increased to INR 2 lakh from the current limit of INR 1.5 lakh. The corporate sector in the country is hoping for a reduction in corporate tax. Clarity on bitcoin tax is expected in this budget.

  • In terms of agriculture, the rural community is expecting welfare benefits. The government could woo its voter bank with benefits aimed at farmers and laborers. The Government should also focus on its poor performance in terms of job creation. The target should be boosting rural demand and increasing the wage income. The minister has already set the agenda by declaring agriculture to be its top priority in the budget and they will have to push it through necessary steps to achieve the goal of doubling the farmers’ income. Agritech startups are significantly contributing to the agriculture sector and filling the gap in terms of efficiency, productivity and technology implementation.

  • With regard to the health sector, there is hope of a higher fiscal allocation from the Budget. There could be a rise in health spending by 11% which can help meet critical health infrastructure gaps. Healthtech startups expect a rise in spending in terms of infrastructure facilities, reduction of GST and an increased space for innovation.

  • In terms of real estate, the sector saw a number of positive developments in the year through the implementation of RERA. The regulations will bring transparency and boost the credibility of the builders. Experts seek low interest rates on home loans, a quick and hassle free clearance of projects, less legal compliance and higher access to credit. Additionally, lower tax rate and a paced up listing of REIT is expected from the budget. The government will also push its ‘Housing for all by 2020’ agenda and take essential steps for the same.

  • The logistics sector has been moving upwards in the last few years. The implementation of GST will have a positive impact on the sector due to the removal of multiple taxes. The startups in this sector are making a demand for the government to formulate a transportation policy which will help in smooth transportation of the goods. Logistics startups expect integration in the market while capitalizing the techno efficiency which is offered by the startups.

  • Ecommerce industry in the country has managed substantial growth over the past couple of years with an increase in the penetration of internet. The Government has taken initiatives to reduce the tax rate by 5% for SMEs with a turnover exceeding INR 50 crore. The government has led the ‘Digital India’ movement, liberalization of Foreign Direct Investment norms and demonetization which has helped this sector expand across the country. The industry expects a rationalization of the tax structure which will increase the purchasing power of the population and push digitalization further.

  • Lastly, the education sector had an outlay of INR 79 crore in 2017 and people are expecting a rise in the same in Budget 2018. This sector is a huge opportunity for edtech startups. The market has a huge potential and there is a need for the government to recognize the same and increase the spending for ensuring high quality education.

It will be interesting to see whether the expectations of the startup sector turn into reality or not.

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