Amidst this new normal, the flexible co-working industry has become more relevant than ever and the demand for co-working spaces have surged significantly owing to its affordable pricing options and flexible work culture. Many large enterprises and corporates have also shifted their gears to the co-working space as they embraced the hybrid work model to suit their organizational requirements.
Taking into consideration the growing demand and gaining popularity of hybrid working, we have major expectation from the upcoming Union Budget that can further accelerate growth of this sector. We expect the government to enable co-working firms to claim input credits on work contract and construction services supplied, as detailed under GST provisions that can enable outflow of cash and can be spared from 18% levy, which is crucial in this pandemic time. The co-working industry also expect special packages and tax relaxations for the start-up sector as this will boost the existing and upcoming start-ups, thereby increasing demand for co-working space.
Presently, the rate of TDS applicable on coworking services is 10% as coworking companies provide renting of both movables and immovables. As the industry is going competitive, it will be good if the rate of TDS on coworking services is reduced. It will enable us to provide real estate solutions to clients at economical rates and will also help in better flow of working capital. We also hope for the extension of Investment Tax Credit (ITC) to developers as this would imply lower lease rates to tenants and benefit coworking players.
There is also need to reduce GST to the lowest slab for upcoming startups as it will make a significant impact on their budget.
Currently, coworking spaces charge a GST of 18% to all clients and this is a big impact to startups. Hence, it can be reduced drastically. Coworking firms are also hoping that input tax credit under GST be extended to developers so that it could be passed on to companies who lease out space and thereby reduce their overall costs.
The industry is also looking forward to an added infrastructural push from the Government, and a single-window clearance system that helps in faster establishment of co-working spaces to non-metro cities as well. Overall the coworking sector, which is now the new mantra for companies, is further expecting improvement in the ease of doing business.
The author of this article is Mr. Manas Mehrotra, Founder, 315Work Avenue
The views and opinions expressed are not of IIFL Securities, indiainfoline.com