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Pune reacts to Union budget: Startups welcome decision on ESOP, tax benefit
Experts are of the view that five-year tax holiday on employees’ stock ownership plan (ESOPs), seed funding to support early-stage startups, limit on taxation on profits, amendments to section 80IAC of Income-tax Act and new schemes will encourage startups
City startups have welcomed the ease of doing business policies introduced by the government in the Union budget. Experts are of the view that five-year tax holiday on employees’ stock ownership plan (ESOPs), seed funding to support early-stage startups, limit on taxation on profits, amendments to section 80IAC of Income-tax Act and new schemes will encourage startups.
Emoji: Happy
Some encouraging policies have emerged in the budget for the startup ecosystem to ensure ease of doing business. While the seed-fund to support early-stage startups will motivate more entrepreneurs, the advisory cell on investment will help in tackling some existing challenges. The portal to facilitate faster clearances for businesses at a state and central level is a welcome move. It is good to see a resolution of the issue of dual taxation on ESOP (Employee stock ownership plan) shares held by employees. The tax payment has been deferred by five years, or until employees leave the company, or when they sell their shares—whichever is earlier. This needs an amendment to ensure tax deferral is applicable till the sale of the shares and not till the end of employment. This is because in most cases the issue arises when the employee leaves and needs to pay tax but there is no liquidity or cash flow since the shares are not saleable. Apart from this, the limit on taxation on profits for startups has also been increased to those with a turnover of Rs 100 crore. The government has also duly pushed for further use of technologies in achieving the vision of a digital economy and ensuring seamless delivery of services. The allocation for skill development is welcome, however, we need to use this to bridge the skill gap in India as against just focusing on sending them abroad.
K Ganesh, Serial Entrepreneur, GrowthStory.in
The deferment of ESOP (Employee stock ownership plan) taxation at the time of exercise is a welcome move. This will help motivate and hire high-quality resources. The amendments to section 80IAC of the Income-tax Act on relief to startups is lacklustre. This section has several conditions that need to be fulfilled and a lot of approvals built into it as eligibility criteria. The government needs to relax this more. Reduced compliances via single window for multiple compliances, reduced applicability of various Acts could really ease doing business in India and this will be more impactful.
-Archit Gupta, founder and CEO, Cleartax
With the corporate tax being slashed to 22 per cent, companies can now have a little more room to breathe and benefit from the assistance in funding through the investment clearance cell that has been proposed. This budget has certainly addressed some challenges that were faced by budding startups and has made it easier for them to receive funding from investors.
-Sandipan Mitra, Founder, Hungerbox, India
Making policy for data centre parks for digital resources like fintech, AI, aggregator platforms along with the connection of one lakh villages via optical fibre internet is great news for digital India. This will increase digital penetration into India that was unthinkable before.
-Harsh Jain, co-founder and COO, Groww
Introduction of new schemes will help the small players in the export sector in a big way. The new Nirvik scheme introduces high insurance cover for exporters at a reduced premium. Simplified processes for faster claim settlements will be beneficial for both the exporters and the general insurers. It will lead to providing high insurance cover, reduction in premium for small exporters and simplified procedures for claim settlements, this will encourage export finance.
-Tim Nicolle, founder, PrimaDollar
