India's start-up industry has very high expectations from the upcoming budget, especially as the industry is at an influx point. The start-up ecosystem has attracted foreign direct investment worth $239 billion in the last five years, and made India the second largest start-up hub in the world. The industry is hopeful that the upcoming budget will have policies and recommendations that will further strengthen the industry as well as the inflow of funds to the sector. One of the key areas that can aid the industry is clarity with regard to the taxes and the compliances that a start-up needs to adhere to. Start-ups need clarity on taxes. It would also be helpful if they are offered hand-holding, especially when it comes to compliances and regulatory affairs.
Given that start-ups are attracting more investments, promoters should have confidence that they will be guided without having to worry about any compliance threats. Last year, investors had an anxious moment after angel tax notices. The industry would want the government to simplify the taxes and create a mechanism that addresses these issues without making the promoters look like defaulters.
Apart from easing the financial burden, clarity on taxes as well as regulatory processes will reduce the wastage of resources, smoothen the process and improve compliance. Clarity will also boost investors' confidence in the ecosystem. Further, currently every company that wants to operate in the country - irrespective of whether it is a start-up or an established entity - would need multiple numbers like the Labour Identification Number (LIN) - or Shram Pehchaan Sankhya (SPS), Corporate Identity Number from ROC and PAN number to run a business. This regulatory regime makes the process of compliance a cumbersome one especially for start-ups which don't have the bandwidth both in terms of knowledge and resources.
The government should look at simplifying this and adopting a single number, i.e. Unique Enterprise Number. The Unique Enterprise Number will reduce the need for maintaining multiple numbers and has the potential to improve compliance significantly. The government should earmark funds and set up a national centre for Artificial Intelligence (AI) as it will help in setting up a data platform.
The platform will also act as a skilling, re-skilling and research avenue. The centre will help in solving the legal, regulatory and cyber security challenges. It will also look at how AI can be used in healthcare, education and agriculture from a public systems delivery perspective, and will bring efficiency and more jobs.
Another aspect wherein intervention is required is the latest e-commerce policy. The policy needs to be re-looked at. Amendments to it are crucial to protect the interest of dependents or impacted parties. While the sector has jobs to offer, the availability of skilled talent who can take advantage of the available opportunities is a concern especially in sectors like logistics, delivery, warehouse and back office. The budget should address this issue and make provisions to create sector-specific initiatives.
Further, the government should focus on creating a more robust IT policy especially with regard to privacy laws and block-chain technology. It will provide the much needed clarity for companies working with new age technologies to set up shop in India. Further, to create a tech ecosystem, the union budget should make provisions wherein IT research is incentivized. There should be weighted deduction for research and development (R&D) initiatives. Special support should be offered to companies engaged in the development and sale of software. The support should be extended to even companies engaged in IT services.
(Mayur Saraswat is Business Head-IT and Digital at TeamLease Services)
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