The expectations have steadily risen since the day Prime Minister Narendra Modi announced ‘Startup India, Standup India’ initiative. To add to it, release of action plan in January along with issuance of clarification by the Reserve Bank of India for the benefit of Startups is keeping the tempo up with a hope of final spectacle in Budget 2016.

The stage is set; entrepreneurs wait eagerly for the curtains to rise on the Budget, 2016. If Government were to convert intent into policies and implement them rigorously, the startups can be the next big force shaping the Indian economy.

If one were to look at the wish list of Startups from the upcoming Budget, it will look something like this:

STARTUP BUDGET WISHLIST FOR THE FINANCE MINISTER

1. Ease out direct taxes including Minimum Alternate Tax (MAT) to help reduce the cash flow burden and funding challenges

2. Tax exemptions and incentives both on direct and indirect taxes need to be introduced

3. Ease out ESOP taxation

4. Exemption from Transfer Pricing regulations up to a reasonable threshold allowing businesses to work with related enterprises for growth

5. Presumptive taxation regime to be extended to streamline compliances and reduce tax litigation

6. Considering inherent risky nature of startups, ease out taxation regime for investors in startups to enable them raise funds and investor exits to be made more compliance and tax friendly

7. Policy regulations like ease of compliance, reliance on self-certification instead of audits, tax exemptions for startups will allow entrepreneurs to devote their time, energy and resources to build upon their innovative ideas.

8. Benefits/exemptions to be provided to sectors requiring startup thrust along with making cheaper capital available for them to deliver

9. GST framework to be introduced with startup friendly notes

10. Domestic schemes on the lines of Service Exports From India Scheme (SEIS) to be introduced for startups working from backward or smaller towns.

And the list can go on, however more realistically, startup benefits need to be clear and focused. The current Government appears to understand the issues faced by the Startups and if they are able to convert their understanding into workable measures, we will see a new sector emerging which will not be measured only by the stock market indices but by the real economic growth.

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Nirav ManiarAuthored by Nirav Maniar, Partner & Head of Regulatory/Corporate Law at International Business Advisors. Nirav can be reached at nirav.maniar@ibadvisors.co

International Business Advisors (www.ibadvisors.co) is a boutique audit, tax and consulting firm run by ex-BIG4 professionals and working extensively with multinational companies operating in varied sectors including e-commerce, mobile, manufacturing, real-estate and hospitality. IBA operate out of its offices in Delhi, Mumbai and Bangalore.

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