Startups take on Budget 2020

The extension of GEM e-marketplace as a unified procurement channel should bring more vendors (from the current 3.2 lac) onto the platform.

Feb 01, 2020 05:02 IST India Infoline News Service

Meghna Suryakumar, Founder & CEO, Crediwatch –The focus on enabling growth for MSMEs in today's Union Budget is encouraging. Enabling NBFCs to extend invoice financing to MSMEs through TReDS, should enhance opportunity to fuel the Indian economy and widen the acceptability and trust by the BFSI sector. The extension of GEM e-marketplace as a unified procurement channel should bring more vendors (from the current 3.2 lac) onto the platform. Additionally, amendments to Factor Regulation Act 2011 should boost the MSME sector. On the Debt Recovery side for lenders, the allowance to smallers NBFCs to approach the DRT for smaller ticket size loans, would be beneficial in lowering NPAs & improving the asset quality. However, we expected to hear more clarity on the scheme to provide subordinate debt to be provided by banks for entrepreneurs of MSMEs since less than 15 % of the 50+ million Indian Small businesses have access to formal credit and there is a debt financing gap of the SME is over $1 Trillion.By allowing data centre parks in the country, the government has set a positive sentiment for the industry. While this will allow better infrastructure in storing and dissemination of data, we were expecting the government to touch upon incentives for setting up data centres which will allow Fintechs to scale faster at an economical cost. This coupled with the extension of Bharat Net (FTH) to 1 lac gram panchayats would add a significant boost to the Digital push in the country.Given that several steps have been taken in the past to drive the Corporate Bond market in India, the increase of FPI limits from 9% to 15% is a positive push to increase international participation in high quality borrowers via the debt route. This coupled with easy access to credit from banks & NBFCs should bring down credit costs in the medium term.

For start-ups, considering the fact that in the initial years, one may not have adequate profit to avail this deduction, extension to avail the claim of deduction from the 7 years to 10 years is a breather. Deferral of tax on ESOP plans for start-ups should also help bring quality corporate talent to this industry.

Archit Gupta,founder and CEO,Cleartax,Complex tax regime for taxpayers with the slabs rejig. With the optional new regime, taxpayers will have to evaluate what works better. Those committed to long term saving and investing via 80C may be discouraged and this may likely demotivate taxpayers from tax-saving linked investing. DDT removal is good as it increases dividend received in the hands of the taxpayer - however, such receipts to now be taxable in their hands. Those above 20% tax slab - will now face more tax on their dividend income.  We welcome deferment of perquisite taxation - now taxation at the time of 'exercise' deferred to 5 years or till they leave the company or till they sell their shares - whichever is earlier. This will be a key plank for hiring quality resources. Raising turnover threshold for audit for businesses to Rs 5Cr is a welcome relief. Hopefully tax filing for such businesses will also be simplified. However, such businesses will have to be careful with keeping cash transactions under 5% and will need a technology based mechanism to track that.

Sandipan Mitra, Founder, Hungerbox,India has embraced the shared economy and welcomed the digital revolution with open arms. The Union Budget provides some important benefits for  emerging entrepreneurs. With the corporate tax being slashed to 22%, companies can now have a little more room to breathe and benefit from the assistance in funding through the investment clearance cell that has been proposed. This budget has certainly addressed some challenges that were faced by budding start-ups and has made it easier for them to receive funding from investors.

Tim Nicolle,Founder, PrimaDollar, says, “The Finance Minister’s announcements under Union Budget 2020 introducing new schemes will help the small players in the export sector in a big way. The new Nirvik scheme introduces high insurance cover for exporters at a reduced premium. Simplified processes for faster claim settlements will be beneficial for both the exporters and the general insurers.It will lead to providing high insurance cover, reduction in premium for small exporters and simplified procedures for claim settlements,this will encourage export finance. This will boost exports. Coming to the MSMEs, the announcement for the subordinate debt for entrepreneurs is a big positive and will help the MSME sector benefit in a massive way. These seem to be sound measures that can stimulate profitable activities for players in the trade and finance sector.”

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