Union Budget 2016-17: ‘Mouth-Watering For Startups
Union Budget 2016-17: ‘Mouth-Watering’ For Startups. To begin a startup in India is nothing short of drama, there are so many hurdles to cross starting with seeking routes of acquiring maximum consumer (in case Startup is a B2C company), risk aversion of investors, lack of government incentives and policies, etc. Still, after going through all these, there is no guarantee of success for the entrepreneurs.
With the advent of startups, the government has lately realized that startups are indeed the vehicle for both social as well as economic growth of the nation. This significant concern of the government had resulted in bringing out the new initiatives like Digital India, Make in India, and Start-up India, Stand Up India. BRAND FOOD RETAIL
Finance minister presented the Union Budget 2016-2017 on February 29th and it embraced different key areas like Agriculture, Rural Development and Infrastructure and so forth. While the startups and investors were hoping that the new Union Budget would be crucial for startups, but it did not turn out to be as expected. There is dubiety whether union budget 2016-2017 would truly help India to startup and stand up? Mouth-Watering For Startups
To ensure ease of doing business, major amendments in the Companies Act, 2013 are likely to be proposed and thereby, aiming at favourable growth for startups in the country. One day registration bill will also be introduced as a part of the Union Budget 2016-2017 to ease up the process of registration. Extension of Section 10AA for SEZ units until 2020 will also lead to favourable results.
Union Budget provides for 100% deduction of profits for 3 out of 5 years for startups set up from April 2016 to March 2019. However, MAT (Minimum Alternative Tax) will apply in such cases. It is to be noted that most of the startups do not make many profits in the initial 5 years and moreover, they do not enjoy complete tax holiday as indirect taxes like MAT will be levied.
Increase in the turnover limit to 2 crores under Presumptive taxation scheme under section 44AD of the Income Tax Act, 1961 will bring respite from a large number of assesses in the MSME category.
Union budget also provides for 500 crore allocations announced for the “Startup India, Standup India scheme”. Lowering of Corporate I-T rate for manufacturing entities not exceeding Rs. 5 crore turnover to 25% plus surcharge will help entities to channelize these funds towards capital expenses.
“Standup India Scheme” will facilitate at least two projects per bank branch. This will benefit at least 2.5 lakh entrepreneurs. Banks will provide loans to women and SC/ST entrepreneurs in India. Furthermore, the scheme would help startups protect their patents and leverage 80 per cent discount on filing patent applications by startups.
Not only specific schemes and incentives for startups will aid the startups in their growth, but steps taken by the government for improving infrastructure, rural development and digital literacy would also bring a positive outcome for the startups as most of the startups are Internet-based.
The business ecosystem has responded favourably towards the Union Budget 2016-17, but the real success would be when the promises actually see the daylight as many startups opined that several previous promises have not yet been implemented.