Union Budget 2017: A push and a shove for Start-ups, Technology and Innovation could have done wonders

Overall I would give a thumbs up for the budget, however, due consideration towards the few ‘missing’ links could have made me happier.

Overall I would give a thumbs up for the budget, however, due consideration towards the few ‘missing’ links could have made me happier.

One page tax form, bringing down personal income tax by 5 per cent for a section of salaried class, trimming the corporate tax slab to 25 per cent for Micro, Small and Medium Enterprises (MSMEs) has caught the imagination of a segment of the population in the Union Budget 2017-18 but for the startup and Tech Innovation world it has next to nothing.

Science & Technology, Innovation and Startups are the one who build the ‘future’ of the society. The investment in the mighty three is high and yield slow results, but once the results starts coming the impact is huge. Take an example of investment in space technology program few decades back, now India is among leaders in the world.

If there was a time ever for the startups to be given a push it is now, for one has witnessed a drop in startups, money drying up in venture capital and a few going back to taking up jobs. A clear policy on issues besieging the startup world would have given a spring it its feet as the verve that one witnessed in the startup sphere a few years ago has weaned a bit.

Clarity on three fronts namely; innovation, Science & Technology and startups is lacking in the budget. The trio can create a platform and leapfrog in the future. There is nothing much for the entrepreneurial eco-system in the budget.

What was expected in the budget was a fillip to the start-ups by way of clarity in rules and most importantly how to handle losses. Few start-ups are making profit and the tax holiday is valid to only those start-ups who are recognised by Department of Industrial Policy & Promotion (DIPP).

That there is a world of talent out there waiting in the wings to fly with ideas is a foregone conclusion. Youngsters in their teens to 25-somethings are raring to go. If only the budget had something on the Angel tax, it could have done a world of good for the start-ups.

The innovation and startup ecosystem needs a push, handholding and direction. The small businesses will become competitive in the global market ie the MSME sector. Similarly, if there was a rethinking on issues plaguing the startup community such as taxes on early stage investment, ease of doing business and a more comprehensive long term plan for the community to grow, the 2017 budget would have boosted the morale.

The entrepreneurial ecosystem badly needs a push and that should precede with a robust long-term policy on innovation, Science & Technology and Startups. It is never too late; a meeting with all the stake holders on envisaging a plan is all that is needed. Anyone ready? I am.

(The article has been written by Nikhil Agarwal, Chief Executive Officer, AP Innovation Society, Government of Andhra Pradesh. All the views expressed are personal)

GST

Moving inch by inch towards GST

The 9th GST council meeting between the centre and the states on January 16 passed off with a broad consensus on several fronts. The roll out of GST would begin by July 1. The centre conceded in leaving 90 per cent dealers in under Rs 1.5 crore annual turnover category within the State government purview.

 Another contentious area of levying tax on economic activity within 12 nautical miles of territorial waters was given to states though such rights vest with the centre.  The initial roll out of GST by April 1 may not happen now and has been deferred to July 1, 2016. Nevertheless, the movement towards a new GST regime is happening inch-by-inch.

 In the next council meeting scheduled on February 18, the officials would sit together to categorize goods under the slabs of 6 per cent, 12 per cent, 18 per cent and 28 per cent. Finance ministers of different states have been making efforts to see that there would be no tax on agriculture products and minimum possible tax on goods used by the common man.

On the issue of differences between states over GST, the centre would intervene and resolve.

 Overall there has been a consensus among all the states barring West Bengal which insists a 100 per cent control over the traders with a turnover below Rs 1.5 crore.

The power to levy and collect Integrated-GST, a tax on inter-state movement of goods and services, would lie with centre but by special provisions, states will also be cross-empowered.  While there are issues such as dual control over assesses, the fact that with each council meeting some headway is being made augurs well for GST.

The coming days are exciting as several questions on sharing of administration, how is it going to be for large tax players, whether it would be on the basis of revenue or type of supply is to be seen.

The publication of GST laws would be keenly observed as all stake holders prepare for what can be termed as a new regime. Watch this space for more on GST.