Economic Survey for rationalisation of tax policy for startups

Tax policy and its implementation for startups must be rationalised to foster innovative investments in the Indian economy, the survey said.

4th Jul 2019
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The Economic Survey on Thursday suggested rationalisation of tax policy for startups to encourage 'innovative investments' in the Indian economy, as it acknowledged their role in driving economic growth and creating jobs.


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The Economic Survey for 2018-19, tabled in Parliament by Finance Minister Nirmala Sitharaman, noted that countries across the world recognised the need to evolve tax system that can foster innovation. 


"Therefore, tax policy and its implementation for startups must be rationalised to foster innovative investments in the Indian economy," the Survey said.


It pointed out that growth in the new economy cannot be fostered without an ecosystem that rewards innovation and entrepreneurship. 


"Startups and innovative ventures face significantly greater uncertainty than traditional brick-and-mortar firms. Yet, policy ambiguities that create collateral damage for genuine risk-takers can affect investments by dampening the animal spirits in the economy," the Survey added.


Underlining the vibrant startup ecosystem that has developed in India, the Economic Survey emphasised that continuing the creation of an ecosystem for private investment, especially in the new economy, is critical to enable the cycle of investment, demand, exports, growth and jobs.


The 'Startup India, Standup India' initiative in 2015 has aimed to create an ecosystem that is conducive for the growth of such companies. As on March 1, 2019, 16,578 new startups were recognised across 499 districts, 47 percent startups from Tier 2 and 3 cities. 


Elaborating on industry-wise distribution of recognised startups, it said IT services accounted for around 15 percent, followed by healthcare and life sciences at around 9 percent and education at 8 percent.



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