Entrepreneurs hail measures on angel tax

Hyderabad: Startups expectations from the 2019 Union Budget were immense, however the government has tried to address the most basic pain point for a startup - Angel Tax.

From now on, startups and investors filing requisite declarations will no longer be subjected to any kind of scrutiny with respect to the valuation of share premium. The introduction of e-verification mechanism for the same is a welcome step, say startup founders.

Speaking with The Hans India, KK Jain, founder, AnyTimeLoan, says, "earlier when startups raised capital, they had to get a valuation certificate which used to cost heavy.

That has been removed off which is a welcome move. The income tax department will henceforth not scrutinise the startup for the valuation which comes up every six or nine months wherein the valuation shoots up by two or three times.

No founder needs to inform about the source of the money and the reason behind increase in valuation to the income tax officer which is beyond their capability to understand."

A very interesting announcement made by the Finance Minister which the startups were looking forward to was about the exclusive television channel that would come up for startups.

Anuradha Thota, founder, Blackbuck Engineers Pvt Ltd, says, "the exclusive TV channel announced for startups is a refreshing move. Though, the action plan is not clear yet, I think, the channel should feature live action and real investments like Shark Tank."

Many startups were looking forward for area specific fund pool to be announced. "The fund of funds for start-ups was created to support around 10,000 startups but the disbursement of funds has been quite slow and till date only 247 startups have received funds.

The emphasis should be more on implementation to make the effective use of such schemes," adds Thota.

On the same lines, Jain further adds that, "the government should ensure that funds earmarked in the last budget should reach the startups by ensuring transparency and clarity in the application process. Till such time the funds are allocated, increase in fund size does not sound sensible."

Startups have applauded the governments support to women entrepreneurs. "The government's continued focus on encouraging women entrepreneurship and building women-led policy making is appreciable.

The host of incentives announced backs the entrepreneurial spirit of India.

However, a demand which is long pending is that the long-term capital gain tax of 20 per cent should be reduced to give fillip to startup investments as an asset class," says founder of Kyt ventures, Dr Anu Gupta.

Fintech startups were looking for relaxation on GST which indirectly is loading the consumer.

"18 per cent GST for financial services is too stringent, GST has to be mellowed down to 12 per cent.

Besides, compliance and regulation in fintech has to be relaxed as a startup can concentrate on innovation rather than push itself to follow regulations," says Jain.

Ashok Reddy, founder, Pragnya Retail Pvt Ltd, says, "The special administrative cell in Central Board of Direct Taxes which is entrusted with addressing grievances will help bring more angel investments into startups even at the growth stage. And this is a good development for us."