We expect the honorable Finance Minister to encourage the flow of equity to start-ups for generating millions of productive jobs. Measures like permitting pension funds, provident funds, charitable & religious trusts to invest a small part of their corpus in Category 1 AIF and offering special incentives such as tax deduction to investors in start-ups or Alternative Investment Funds (AIFs) will indeed help. MoF can replicate the provisions of Section 54 which has been encouraging the High Net worth Individuals (HNIs) to re-invest capital gains in residential property. HNIs & Corporates can now be encouraged to invest in Category 1 AIF to seek a deduction against capital gains re-invested in AIFs.
Additionally, to really incentivize capital flow into early stage ventures, I hope the Union Budget provides that any capital gains arising from sale of investment in venture capital undertaking be exempted by introducing a securities transaction tax on the lines of transactions in listed companies.Besides, this Union Budget can play a crucial role in improving India’s ranking from 173rd position (in the Ease of starting a business parameter, World Bank Report 2013) by simplifying processes and making it easier for entrepreneurs to start a business.
Sunil K Goyal, Fund Manager & CEO, YourNest Angel Fund