FM Nirmala Sitharaman promises measures to further boost Indian startups
Union Finance Minister Nirmala Sitharaman met a cross-section of industrialists, trade bodies, ecommerce companies, and startups to receive feedback from them, following the presentation of the Budget on February 1.
The Minister, accompanied by senior officials of the Ministry, promised to look into the various demands, especially from the startup ecosystem as the Budget did not actually live up to expectations of Indian startups.
The only consolation was the proposed deferment of tax on Employee Stock Ownership Plan (ESOPs) for a period of five years, which is currently taxed at two levels.
However, the fine print of the Budget document reveals that to qualify for this deferment, startups have to first meet several conditions before they stand to gain from this new proposal.
One of the criteria that startups need to fulfil is to be approved by the Inter-ministerial Board (IMB) of the government.
Representatives of the startup ecosystem sought further smoothening of the process on how startups are certified by the IMB.
According to people present during the interaction, Finance Minister Nirmala Sitharaman promised that steps would be taken to smoothen the process and it would be aligned with global best practices.
The other issue around tax disparity between listed and unlisted companies was also raised with the Minister.
On this, the people present during the interaction said that Sitharaman promised that incremental steps would be taken over a period of time to give a boost to the startups in the country.
Meanwhile, the representatives of the ecommerce companies raised the issue of tax deducted at source for sellers on their platforms, which would hurt their business due to the burden of compliance.
In fact, leading ecommerce companies – Amazon and Flipkart – have already made a representation with the government seeking a rollback of this proposal.
(Edited by Saheli Sen Gupta)