What Do Startup Entrepreneurs Want From Union Budget 2021?

With the announcement of Budget 2021 right around the corner, it has become a topic of discussion for all. The budget, for Nirmala Sitharaman, is a test of resilience. To take the country out of one the worst crisis since independence, she has the responsibility of putting the country back on a track.

Here are some experts' opinion on Budget expectations for 2021 for their respective industries and what could change in this year.

Budget 2021 expectations

Tejas Khoday, Co-founder and CEO, FYERS states

Tejas Khoday, Co-founder and CEO, FYERS states, “With an economy that is gradually reviving from a Covid-induced slump, investors and citizens at large, will be eager to watch the policy measures proposed by the finance minister, both at home and abroad. At an individual level, given the unwarranted effect of COVID on the salaried incomes, taxpayers would be relieved to be awarded with an upgrade in the personal income tax slabs. That said, given the fiscal situation and the state of direct tax collections, it remains to be seen whether such a relief measure would be possible by the government.”

He adds, "On the stock market front, a lot of regulatory changes were announced by the SEBI over the last few months, to reduce systemic risks within the broking industry and to bring in additional transparency. While most stakeholders are acclimatizing to these new regulatory changes, the FM can extend support by certain measures, putting the investment and broking community on a strong footing.

A few proposals that can bring cheer to retail investors are - 1. Abolishing the much-criticized Long-Term Capital Gains (LTCG) tax. This would be a welcome move. A widely discussed point of note is redefining the concept of Long Term to 2 years and the change of taxation to Zero. This would also be a welcome move, as it can bring stability to the duration of investments across financial assets. 2. Reduction in the quantum of Securities Transaction Tax (STT) / Commodity Transaction Tax (CTT), which has been a long pending wish from one and all.”

“These are critical points of note and any relief in one or both of these proposals would go a long way in boosting the investment spirit of all investors – retail, institutional, Indian as well as global,” he concluded.

Abhimanyu Saxena, Co-founder, Scaler and InterviewBit

Abhimanyu Saxena, Co-founder, Scaler and InterviewBit states that "The year 2020 has been a turning point for every organisation working in the space of ed-tech. It has allowed students and young professionals with ample time and opportunities to build on their skills. Continuing on this journey, 2021 is a crucial year, and it will set the course for the entire industry for years to come.”

“With the new budget, we expect that the government will lower the GST levied on the ed-tech industry. It is currently at 18%, if it were to go down by even 1or2, it would have a significant impact - making online education that much more accessible and affordable. Another thing that could be implemented is allowing working professionals some tax benefits redeemed against the fees paid for online upskilling courses and programs. It is a great motivator for professionals to upskill while allowing our nation to build a more diverse talent pool comparable to the best in the world. Further, interest paid on loans for higher education is exempt from Income tax. A similar policy can be introduced for loans being taken for online courses as well,” he said.

He further adds, “Recognition from apex bodies like UGC, AICTE, and NSDC will also help alleviate digital education and upskilling programs' status and awareness. All or some of these measures are sure to encourage more and more working professionals to upgrade their skill levels and knowledge. In the long run, this is bound to better the country's human development index. We are on a cusp of an education revolution, and any impetus from the government will go a long way in establishing India as the hub for skilled talent.”

Mr Neeraj Tyagi, Founder and CEO, We Founder Circle

“The previous budget did not completely address the expectations and requirements of the startup ecosystem. There were some misses including – working capital crunch, tax parity on capital gains etc. This time the expectations are more due to pandemic and this makes it a big opportunity too if addressed right. After the COVID- 19 outbreak, startups are leading the technology adaptation across the sectors. This has further built an interest among corporate to invest in startups and technology-oriented projects. Therefore, this is the right time for the government to incentivize the startup funding and work towards relaxing the policies to encourage angel investors to invest more. Also, the government needs to push major fund allocation and also lower the GST which currently has narrowed the scope of maneuvering for startups,” said Mr Neeraj Tyagi.

Kushang Kumar, CEO and Co-Founder, SupplyNote

“The startup ecosystem needs funds and capital now more than ever. The government needs to facilitate the capital inflow from all possible channels. The budget should remove the corporate dividend distribution tax or levy DDT at low rate to encourage foreign investors. Secondly, startups should be able to get easy loans at low interest rates. At this point, it’s all about taking immediate steps for faster recovery,” said Kushang, CEO and Co-Founder, SupplyNote, a supply chain automation startup.

Mrityunjay Shahi, Founder & CEO, SalaryDost

“The year 2020 was unexceptional for every sector,” states Mrityunjay. “Though the Fintech sector seemed to be profitable, it faced a lot of challenges in the Financial year. We are expecting a few key steps that should be taken by the Ministry of Finance in this financial year. First of all, there must be a regulatory authority assigned by RBI & Ministry of Electronics & Information Technology (MEITY) to keep an eye on the fresh industry players.”

“There should be a pre-defined set of rules & regulations for the startups to manage their businesses ethically; respecting the customer's entity. Also, talking from the customer's POV the Government should set up subsidiary bodies dealing with the Fintech startups concerning underprivileged customers who are failing to repay their dues. Last year the Finance ministry took some of the beneficiary decisions including tax relief on ESOPs and the reduction on corporate tax to 22% which is the lowest in the world. We are seeking simplified GST rules to smoothen the process for both the customers' and company's end,” he adds.

Gaurav Kumar, co-founder and CPO of OkCredit

“One of the biggest issues for SMBs has been lack of capital. And thanks to the pandemic, this problem has become more acute. The government should tap into digital channels for better distribution of credit. Today, a lot of SMBs have come online and OKCredit itself has a reach across 2800 locations. The startups working with SMBs can not only execute with speed but will also implement last mile delivery,” states Gaurav.

“Last year, the government announced a stimulus package for MSMEs. We expect the government to sustain it through this year, given how vital SMBs are to the economy,” he adds. “The increased impetus on "Aatmanirbhar" and loss of jobs has meant that individuals will be looking to start small businesses. The government should encourage them by empowering them with capital and by making it easier to start a business. As migration happened during the pandemic, SMBs have also been struggling with manpower crunch. It's an opportunity for the government to bring a formal structure to this form of employment, along with social security benefits. This will not only benefit the SMBs but the industry at large.”