An important marker of growth and the fulcrum at which most industries operate and function, Union Budget 2019 will determine the course of economic and industrial development in the country. The industry leaders have spoken in a singular voice when it comes to the expectations of the budget and its impact on the MSME sector. With initiatives like Start-Up India, Digital India and Make in India, the government has set a precedent, which would require further assessment and evaluation. Here’s what the Union Budget could focus on to enable and promote entrepreneurship in the country:
1. Relaxation or Removal of Angel Tax: Budding entrepreneurs heavily rely on adequate capital and access to financial resources. Removal or perhaps relaxation to a certain degree would encourage angel investments in Indian startups. Taxation of angel investment has left a dent in the Indian startup ecosystem, further threatening the survival of many early-stage ventures. The government should consider measures to facilitate access to growth capital.
2. Hassle-free Compliance Process: With a robust startup ecosystem in India, the government policy should reflect measures for seamless and hassle-free compliance. Decreased regulatory interference and simplification of GST filing are some measures that could be adopted to facilitate bureaucratic processes.
3. Empowering ‘Make in India: To encourage homegrown R&D and product manufacturing in various industries, the union government must look into lowering GST slab for manufacturing units making products locally in India. A tax exemption or incentive on export of these products or services would help promote industrial growth and skilled-based employment in the country.
4. Decrease Tax Burden on MSME Sector: Considering an increase in the current revenue bracket during ‘Tax Holiday’ period as well as an extended tax break would help startups stabilize during its early years. The policy should take into consideration that startups do not generate significant profits during its early stages. This will help entrepreneurs focus on expansion and outreach.
5. Encourage & Incentivise Digital Payment: With the ‘Digital India’ movement picking up steam, the government must encourage the use of electronic modes of payment. Offering tax rebates and even a reduction in the transaction fee for digital payments will help the startup environment which heavily relies on the penetration of the internet in various parts of the country. Improving connectivity digitization even rural India, will greatly benefit the community.