Budget 2019 expectations: Start-ups demand removal of Angel Tax, reduction in corporate tax
The move will help government to create a sustainable environment for both investor and the start-up attracting angel investment.
On account of Angel Tax hitting both angels and the start-ups dearly, the Micro, Small and Medium Enterprises (MSMEs) have demanded from the Narendra Modi government to remove the Angel Tax in coming budget. They say the move will help government to create a sustainable environment for both investor and the start-up attracting angel investment. Aprameya Radhakrishna, CEO and Co-founder, Vokal told Zee Business Online, "Start-ups are looking forward to abolish the so called ‘angel tax’ forever. It’s been a problem for both investors and startups. For most angels, investing is a way of paying it forward. However, they don’t want the hassle of going through some scrutiny just for investing a small amount in a start-up. As a start-up, we don’t expect the government to tax us for having raised angel investment. Start-ups are employment generators. Start-up investments need to be incentivized."
Amit Aggarwal, Director, Priyanshu Agrotech Private Limited said, "On one hand the Narendra Modi government is trying to protect local businesses by not allowing FDI in multi brand retail while on the other hand they are discouraging local businesses and investors by levying angel tax on them." Amit Aggarwal of Priyanshu Agrotech went on to add, "We hope the government removes the start-up tax in all forms from this budget. There should be no ambiguity or subjectivity in regard to the funds raised by MSMEs or start-ups. The onus is on the government to find ways to separate the few questionable transactions from the thousands of genuine startups."
See Zee Business video below:
— Zee Business (@ZeeBusiness) January 30, 2019
CashKaro Co-Founder & CEO, Swati Bhargava told Zee Business Online that the primary expectation is to see a reduction in the corporate tax rate to around 20% as opposed to the current 30%. She said that this will lead to better profitability & healthier margins for all organizations.
"I hope this is an investor friendly budget that encourages businesses at critical stages of growth to thrive and overcome fund related crisis. For instance, making investment policies more liberal in nature will attract more domestic and international investors for companies across scales and industries. In fact countries like the UK offer tax relief to angel investors for investing in startups via schemes like EIS. India seems to be a unique case that is actually taxing this investment! This practice contradicts the entire focus of PM Modi’s Startup India campaign. Hence, I hope that Angel tax will be abolished for Government recognized start-ups in the upcoming budget. This could be crucial in enabling start-ups, especially SMEs," she said.
A spokesperson from India's Boredroom Comedy said that there was a lot of debate that happened on the taxing of angel investing which created a lot of uncertainty for investors and startups alike.
"I truly hope the Govt. to increase GST threshold to 50 lac or keep flat tax upto certain threshold. Along with it to reduce the number of returns tbe filed below this threshold as it adds to cost. We hope the union budget will provide separate funds to entertainment & media industry to keep Pace with evolving business models & vertical in India," he added.