It’s a new year and a new budget! It is being said that India will witness its best budget in 2021. But, what do start-ups, the entities who fuel the India of the future want from this budget? We have created a wish-list, which the start-up ecosystem would want from the budget 2021:
· Tax benefits extended to employees of startups with respect to exercise of ESOPs should be extended to all startups recognized by DPIIT instead of only startups with tax exemptions.
· Removal of requirement of registration with DPIIT for availing angel tax exemption.
· Removal of requirement of multiple valuation certificates
· Start-ups less than three years old, should be exempted from the requirement of valuation.
· Capital gain taxation of unlisted equity shares should be brought at par with listed equity shares.
· The process of returns for compliances such as GST, TDS and income tax should be simplified
· Compliances under various statutes such as labour laws and Company law should be made simpler
· FEMA provisions should be rationalized through the removal of prohibition on round-tripping.
· Concrete measures to facilitate ease of doing business should be introduced.
· The scope of ESOPs should be expanded to cover non-employees such as consultants and advisors.
· Convertible Notes should be allowed to convert to Compulsorily Convertible Preference Shares
· Access to low-cost financing should be provided
· The cut-off date for commencement of production by manufacturing companies to avail the lower rate of 15% tax, should be extended by one year. The current cut-off date is March 31, 2023.
· Tax holiday should be granted to start-ups being incorporated after April 1, 2021 as well. Section 80-IAC of the Income Tax Act, 1961 currently defines eligible startups for tax holiday as those which have been incorporated after April 1, 2016 but before April 1, 2021.
· Consumerism should be encouraged by offering deductions on local spending.
· Early-stage start-ups should be exempted from paying GST under the reverse-charge mechanism.