With all eyes on Union Budget 2020 on Saturday, specific technology industry lobbies and stakeholders from the startup ecosystem have presented the government with a long wishlist. The recommendations and demands include better a taxation structure to promote exports of services, incentivising research and development, and easing the taxation regime for startups and skilling initiatives in the country.
Among the foremost demands from the startup sector include taxing Employee Stock Ownership Plan (ESOPs) only at the time of sale of shares. Currently ESOPs are taxed when an employee chooses to exercise the options as well as at the time of sale during a liquidity event.
Kunal Bahl, co-founder at ecommerce portal Snapdeal had previously taken to Twitter to ask for relaxation on ESOP taxation.
The Indian Private Equity and Venture Capital Association (IVCA) in its meeting with the finance minister had recommended that the tax pass-through principle be extended to category III Alternative Investment Funds (AIF), popularly known as hedge funds. The association also asked for zero rating of services provided to AIFs to the extent of foreign investor contributions, asking for an amendment under GST law to notify any supplies made to AIF as ‘deemed export.’
In a pre-budget memorandum, industry association for IT and BPO sectors NASSCOM has asked for an extension of corporate tax rate of 15% to newly incorporated companies in Special Economic Zones. The body has also recommended creation of Rs 3000 crore Deep Tech Investment Fund which will back companies in the space of Artificial Intelligence, biotechnology, advanced materials, drones, robotics and other frontier technology over the next five years.
At a briefing, Kunal Shah, founder of rewards-linked credit card payment platform CRED said that the government should improve literacy around credit and provide easy access to credit for individuals and households. He further added that there was a need for consistency on policy measures. “We need to create the right ecosystem and lay out clear long term policies for wealth creators to attract foreign investment, a critical GDP accelerator,” said Shah.
Asking for favourable policy measures for India to become a global mobile component manufacturing hub, industry association Internet and Mobile Association of India (IAMAI) issued a report. IAMAI said that the industry needed Modified Special Incentive Package Scheme, M-SIPS 2.0, for incentivising export oriented mobile manufacturing market.