Budget Bytes: Digital Boost

Aneesh Reddy, 

CEO and Co-founder, Capillary Technologies

"As a retail and technology centric startup, we were hopeful around 3-4 high impact areas revolving around digitization measures, GST, corporate and individual taxation laws and differential duties on certain products.

It was heartening to hear about the Digital theme focused measures revolving around digital payments through BHIM app and Aadhar based payment initiatives. The referral bonus and the cashback schemes would further encourage cashless transactions by consumers and adaptability by merchants.

The MAT credit extension from 10 years to 15 years will help start-ups and companies in investment phase to utilize their MAT credits for a longer period. 

However, it would have been more beneficial to waive off MAT for start-ups entirely. MAT eats up the cash in the initial years when they need it the most.

Although the Finance Minister, had suggested that GST bill will spur economic growth, we were hoping for an announcement on the implementation of  GST bill starting this financial year.  

Overall, this budget has created the most positive impact as far as digitization measures are concerned. 

The digital transformation initiatives coupled with a spike in the digital transactions would encourage more startups like ours to play a vital role in innovating and significantly contributing to boost the digital economy in the country."

Budget Bytes: It's Foursome Handsome!

Sujayath Ali, 

CEO and Co-founder, Voonik

Four ways the Budget 2017 will benefit Startups:

Abolition of FIPB: Government has signaled clear and loud that it is committed to liberalizing FDI policy to attract more more investments. Once the FDI reforms are announced, they will not only attract fresh funds into the current startup ecosystem, but will also promote new ventures in many untapped or underserved sectors of economy.

Merchant enabled Aadhar Pay system: Digital payments play a pivotal role in ensuring consistent customer experience and increasing verified transactions. New merchant enabled Aadhar payments will bring many new consumers who do not have a debit card, into the digital payment environment. This will help startups improve their user identification and engagement.

Schemes to promote BHIM: Mobile penetration has still not peaked in the country. Even those who don’t have PAN card, have a mobile phone. Also a large consumer base of housewives, teenagers, dependent parents etc  who are currently transacting on cash, will now be able to use linked accounts for transactions. This will further help startups to increase prepaid contribution to overall transactions.

Income Tax rate for companies with turnover of over Rs 50 crore has been reduced to 25%: It will not impact tech startups and ecommerce companies directly. But it is a very positive move for the seller ecosystem. Lakhs of sellers are finding new avenues with the growing e-commerce industry in the country. These sellers will benefit from the government move and will be able to plough back money in further scaling up.

Budget Bytes: 6.5 on a scale of 10 for Jaitley

Ajith Mohan Karimpana, 

CEO and Founder, Furlenco

"This budget is a continuation on the path towards improving tax administration & compliance and increased emphasis on digital transactions; Similarly the attempt to clean up political funding is also commendable.

However, given the strong emotions that the Demonetization exercise evoked from the country at large and impending implementation of GST, the government refrained from bringing in any pathbreaking changes on direct  taxes. Most of the proposals of personal and corporate tax have marginal impact for the tax payers.

Specifically coming to the extension of tax break for startups to 7 years, this change was definitely required as there are very few startups that actually generate profits in first 5 years of their existence; reduction in corporate tax rate for entities with turnover less than Rs.50 Cr may not be of much use for new age startups that take 5-7 years and much larger turnover base to turn profitable.

Income Tax rate for companies with turnover of over Rs 50 crore has been reduced to 25%: The impact of this proposal is very minimal as very few startups are profitable at Turnover levels of Rs. 50 Cr; secondly, even if they are profitable, post the expenses, the net profit chargeable to tax is very minimal; tax rate is reduced from 30% - 25% for that  minimal profit - In our view this provision is not necessarily useful for most of the startups.

Overall on a scale of 10 we would rate the budget 6.5.

Budget Bytes: Ignition for Startups

By Anurag Avula, 

CEO and Founder, Shopmatic

"It’s agreeable to see positive reforms being proposed in favour of digital pay systems for the

common man, more specifically in rural and semi-urban areas. The move for forming reduction on tax for small and medium enterprises’ is a boost to “The Make in India initiative”, that will encourage the nation to keep in lines with motivational 2017-18 budget theme of Transform, Energize and Clean India.

It’s also great to see improvement on the high speed broadband connection in rural and tier 2 and 3 cities, which further nurtures the country’s tech essence.

What is interesting to note is the government’s interest in start-ups   and on energising youth and creating jobs. The Profit linked-deductions for start-ups that has been reduced to 3 years out of 7 years, will certainly ease the process.

It's a  good budget for anyone wanting to their business online. With more and more people getting encouraged to use digital payments, merchants will benefit from taking their sites online- since more customers will now, find it easier to buy products from them.

Our platform makes it really easy for people to set up ecomm stores, since we have payments integrated in our site too. Its a win-win for all.

In all its completeness we are quite pleased with the start-up and SME announcements. We believe that the fresh moves made will cultivate the rising upsurge of tech and digital initiatives to further energize the GDP of our nation."

Budget Bytes: Reforms roadmap with rural focus

By Dilip Davda

Veteran Journalist

The third Budget from BJP led government, which was also the first to be advanced by a month as well as a complete budget exercise combining the Railway Budget for the first time in the Indian history, came out with a reforms promise focusing on  rural road map.

Again this was the budget in the backdrop of post historical move of last four decades in the form of Demonetization and, hence, there were many expectations across the board.

As GST implementation is scheduled from 1^st July 2017, the FM kept indirect taxes unchanged for a while but gave boost to the MSME sector with lower corporate tax, enhancing Mudra funding by hundred percent and boosting realty sector with low cost/affordable housing liberal guidelines.

Salaried and low income class got the desired concessions, although they were short of expectations. Individuals (having income up to Rs. 5 lakh per annum) and senior citizens got concessions in tax rates.

Textile and infra sector, including power and road construction, as well as defense sector got higher allocations that will ensure speedy development of economy coupled with security and thus it was a well balanced budget.

This budget has also plugged in the loopholes in political party funding and has also dealt with generation of black money. Th fiscal deficit and the inflation targets seem to be within the desired limits.