Tax rate has been reduced from 30% to 25% which should come as a big relief for startups: Vikram Gupta, IvyCap Ventures

India Infoline News Service | Mumbai | February 02, 2017 19:48 IST

The main positive aspect which i see for startups and SMEs for companies with less that Rs 50 cr of turnover is that tax rate has been reduced from 30 to 25% which should come as a big relief for startups. Most of the startups we invest in have less than Rs 50 crore revenues.

The 2017 Union Budget didn’t have many sops for startups other than the MAT extension of period of carry forward from 10 years to 15 years, the challenge still remains in terms of actual cashflow for the startups.
 
The main positive aspect which i see for startups and SMEs for companies with less that Rs 50 cr of turnover is that tax rate has been reduced from 30 to 25% which should come as a big relief for startups. Most of the startups we invest in have less than Rs 50 cr revenues.
 
On digital transactions there has been a signifiant boost to the entire sector. The investment in infrastructure to boost digital transactions should support the entire ecosystem. Secondly the target of about Rs 2500 crores of digital transactions over the next 1 year facilitated through BHIM, UPI usage should be an interesting area to look at. Taxation relief for digital payment equipment manufacturers will also encourage more hardware players in the segment.
 
Most of the fintech companies in the space should get benefit from the increased focus of the budget on the digital payments ecosystem. The fact that cash transactions of over Rs 3 lakh are not permitted and the cash expenses allowance is reduced to Rs 10k should benefits the online payment companies like FTCash.
 
Also, some clarity is required with regards to usage of cash and also the incentive schemes announced for digital transactions.
 
Some clarifications with respect to Section 56, 68 and 115 of the Income Tax are still required and are yet to be seen in the fine print of the Budget.
 
The author, Vikram Gupta is Founder and Managing Partner, IvyCap Ventures.

 

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