In a two-hour-long speech, Finance Minister Arun Jaitley charted out the much-awaited Union Budget of 2016. And while allocating funds for farmers, electrification of villages, dairy projects and this government's pet project - Swachh Bharat Scheme, he didn’t forget the entrepreneurs of the country.
However, it rather seemed like an extension of the many promises given by Prime Minister Narendra Modi as a part of the ‘Startup India, Standup India’ initiative with the following:
This was announced by Prime Minister Modi as a part of the action plan where companies could register their firms by filling up a form on a mobile app or online portal. The mobile app is promised to be launched on April 1.
Again a revisit, where Prime Minister Modi exempted to startups from paying income tax during their first three years of business operations. However, the minimum alternate tax (MAT) applies.
According to Finance Minister Arun Jaitley, “It's time that SC, ST in the country move from job seekers to become job creators and entrepreneurs.” On the same lines, the Finance Minister has also promised to set up hubs for SC and ST entrepreneurs.
Commemorating the 125th anniversary of B.R. Ambedkar next year, every bank branch of the country will have two programmes running for these entrepreneurs for better facilitation of resources. The Finance Minister believes that this should be the year of empowerment of the ST and SC community.
The government aims to set up 1,500 institutes that promote skill development while teaching entrepreneurship. A total corpus of Rs 1,700 crore is set aside for the programme this year.
A Bankruptcy and Insolvency Law will be introduced in the Parliament during 2016-17. This will equip banks, financial institutions and insurance companies with a comprehensive code to work around bankruptcies and insolvencies.
As per the corporate tax for 2015-16 fiscal, domestic companies were levied with an income tax at the rate of 30 per cent, with a surcharge of five percent levied if the net income of the company for the year was in the range of Rs 10 crore. There was no surcharge levied in case of the company’s net income being less than a crore.
This all together has been adjusted to 29 per cent.
This means that if an Indian startup has a patent, and whatever income is generated from that worldwide, only 10 per cent of tax is levied on the total income generated from the patent.
With this Budget session, it is clear that the Finance Ministry has woken up to the needs of entrepreneurs in the country. It will be interesting to see how the government manoeuvres around the many hurdles to pass GST as well as Insolvency law, both much awaited by the startup ecosystem.