It’s a new year and a new budget! It is being said that India will witness its best budget in 2021. But, what do start-ups, the entities who fuel the India of the future want from this budget? We have created a wish-list, which the start-up ecosystem would want from the budget 2021:
Tax benefits extended to employees of startups with respect to exercise of ESOPs should be extended to all startups recognized by DPIIT instead of only startups with tax exemptions.
Removal of requirement of registration with DPIIT for availing angel tax exemption.
Removal of requirement of multiple valuation certificates.
Start-ups less than three years old, should be exempted from the requirement of valuation.
Capital gain taxation of unlisted equity shares should be brought at par with listed equity shares.
The process of returns for compliances such as GST, TDS and income tax should be simplified.
Compliances under various statutes such as labour laws and Company law should be made simpler.
FEMA provisions should be rationalized through the removal of prohibition on round-tripping.
Concrete measures to facilitate ease of doing business should be introduced.
The scope of ESOPs should be expanded to cover non-employees such as consultants and advisors.
Convertible Notes should be allowed to convert to Compulsorily Convertible Preference Shares.
Access to low-cost financing should be provided.
The cut-off date for commencement of production by manufacturing companies to avail the lower rate of 15% tax, should be extended by one year. The current cut-off date is March 31, 2023.
Tax holiday should be granted to start-ups being incorporated after April 1, 2021 as well. Section 80-IAC of the Income Tax Act, 1961 currently defines eligible startups for tax holiday as those which have been incorporated after April 1, 2016 but before April 1, 2021.
Consumerism should be encouraged by offering deductions on local spending.
Early-stage start-ups should be exempted from paying GST under the reverse-charge mechanism.