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As Finance Minister Nirmala Sitharaman prepares her budget proposals, the venture capital community is calling for the removal of the angel tax improvements in the taxation of management fees and a strong push for expedited approvals on overseas investments and support for deep tech startups.
Read the expectations in detail:
Anil Joshi, Managing Partner, Unicorn India Ventures
The venture capital industry is very young and has certain expectations from the Honourable Financial Minister. Removal of the Angel Tax has been a long-standing demand of the industry. Stakeholders of the ecosystem have made representation to the Govt with an aim to find a solution for the same.
In most cases, the investments at early stages are made to young companies with limited resources. It becomes tedious and nonproductive for everyone, more so it also discourages potential investors from investing because of fear of coming under tax authorities’ scrutiny. It’s a long pending demand and we wish Hon. FM takes it up in the upcoming Budget. The solution will encourage many potential taxpayers to open up to the investment of this asset class.
Additionally, some of the demands are long pending like favorable consideration to GST on management fees and adjustment of management fees toward expenses while calculating income or gains. The industry also demands in the current budget bringing long-term gain at par with listed entities. The VC community would prefer speedier approval on overseas investment as the current process takes too long.
Manoj Agarwal, co-founder and Managing Partner, Seafund
I have high hopes for the upcoming budget to strengthen the deep tech ecosystem in India. The government has made encouraging statements about supporting this sector, and I believe it is crucial to provide more backing at the seed stage. Deep tech startups often require significant research and development, which may not attract early-stage investment from the private sector. A dedicated fund of funds to support investors who are willing to take the plunge into deep tech is vital.
Additionally, simplifying the taxation framework for startups, ESOPs, and investors is essential. In many European countries, investors receive tax benefits for investing in startups, either directly or through funds. Similar provisions in India could stimulate more domestic investment.
Moreover, we need to address the issue of ‘reverse flipping’ for businesses built in India but headquartered abroad. Facilitating an efficient and tax-efficient way for these businesses to return to India could significantly benefit our economy and the government’s revenue in the long run. As we address these concerns, a simplified GST tax regime for the funds and doing away with angel tax will free up a lot of domestic capital for early-stage funding, which is needed today more than ever as we see funding winter thawing at a snail’s pace.
Anushita S P KarunaKaran, CEO & Co-Founder, LawyerDesk
We hope for enhanced access to funding and grants specifically aimed at fostering innovation and scaling operations. Tax incentives and reliefs will be crucial in reducing the financial burden on startups, allowing us to reinvest in growth and development. Investment in digital and physical infrastructure is paramount to support our operational needs and ensure seamless connectivity and logistics.
Additionally, simplifying regulatory frameworks will enable startups to navigate compliance with ease, allowing us to focus on innovation and market expansion. Skill development programs backed by the government will be vital in creating a workforce equipped with the latest technological and business skills.
This will ensure that startups have access to a pool of talented professionals who can drive our vision forward. Furthermore, we look forward to initiatives that promote collaboration between startups, larger corporations, and academic institutions. Such partnerships will foster innovation, research, and development, positioning our startups as key players in the global tech landscape.
Bhuvan Rustagi, Co-Founder and COO, Per Annum
Startups often prioritize growth over profitability in their early years, making tax relief crucial for sustaining operations and fostering innovation. Simplified compliance would alleviate financial strain, allowing startups to focus resources on scaling and product development. Tax breaks during initial profitable years would enable reinvestment for long-term sustainability and economic contribution. Rustagi emphasizes the need for a regulatory framework that supports startup resilience and encourages entrepreneurship, ultimately driving economic growth and job creation.
Ayush Gupta CEO & Co-Founder SwopStore
We anticipate the government’s proactive stance in boosting India’s startup ecosystem, facilitating easier access to funding with potential interest rate reductions of up to 4%. Incentivizing technological advancement and innovation processes will be key. Prioritizing digital infrastructure and skill development is essential, alongside a firm commitment to sustainability, global collaboration, and digital transformation initiatives for a thriving startup landscape
Abhishek Vyas, Founder & CEO, of My Haul Store
We should be optimistic about the government’s commitment to building the flourishing start-up ecosystem in India and anticipate that there would be significant initiatives towards better tax structures, easy and simplified access to capital, decrement of interest rate on business loans (expected up to 4%) and incentives for technology as well as process innovation.
Chitranshu Mahant, CEO & Co-Founder, Primebook
The incentive measures of the budget should be favorable for startups and promote innovation. The funding toward research and development in cutting-edge technologies such as AI, Robotics, and the Internet of Things will further increase the pace of innovation and economic growth. Turning to the next, skill development programs and industry-academic collaborations shall connect the missing link between education and employability, hereby making graduates job-ready.
We also look forward to policies that will encourage domestic production, support MSMEs, and reduce the digital divide—thereby providing an enabling business environment. If these are focused on in this budget, it would make for better futures for students and startups and drive India’s progress in the global economy.