Yesterday, Finance Minister Arun Jaitley presented the Union Budget 2015 at Lok Sabha, however not much space has been given to startup ecosystem of India in this year’s budget except for just one scheme called SETU (Self- Employment and Talent Utilisation), which is essentially a mechanism of techno financial and incubation platform for tech-based startups. The government will be spending Rs 1,000 crore to help incubate these new companies.
Not to forget, in last year Union Budget of 2014, government announced $1.6 billion or Rs.10,000 Startup Fund to attract private capital by providing equity, quasi equity, soft loans and other risk capital for startups. Now, a next union budget has been announced but nothing has been done on ground level for previous announced startup fund, nothing has been released about how the fund will be used by the government and not even some kind of initiation process has been kicked off so far for the same.
Additionally, this year government again announced Rs.1000 crore startup fund with the scheme named as SETU. Questions are being asked about last year promised startup fund (Refer – What happened to Rs.10000 crore startup fund, YourStory, FirstPost).
Before this year’s Union Budget are about to announced the highest expectations of startups from 2015 Budget was a favorable tax reform, as an Indian tech startup has to pay service tax, which is at the rate of 12.36 per cent – a rate similar to what large corporates pay and in this this year’s budget service tax has been increased to 14%, biggest disappointment for startups. This is in addition to startups having to pay excise and income tax.
Additionally, startups in India wanted to make starting-up business in India a lot more easier as current procedure for starting a business requires the entrepreneur to run from corner to corner, office to office in order to get all the approvals, clearances and licenses for his new venture. The sector has been long demanding the setting up of one single window for all these approvals, so that the entrepreneurs can concentrate more on his business and less in running around.
“Modi has said a lot of wonderful things, but so far nothing has happened, other than a lot of public relations,” legendary investor Jim Rogers, who co-founded the Quantum Fund with George Soros in the 1960s, said in a recent interview.
NASSCOM’s Vice Chairman BVR Mohan Reddy reacted in on budget 2015 and said – “Increase in service tax rate is disappointing. Angel tax continues – fair market valuation applicable to angel investments and capital receipts taxed in start-ups. This problem is un-addressed in spite of the focus on entrepreneurship and start-ups. Duality in service tax and sales tax applicability to product companies not addressed.”