Start-ups seek removal of regulatory hurdles
Though start-ups got a shot in their arm from the Budget presented by finance minister Nirmala Sitharaman on Saturday, they are disappointed that measures to ease regulatory hurdles, a pressing need for them, was not addressed by the Budget.
However, start-ups got much relief on the tax front. The Budget proposed to increase the limit and extended the duration for tax deduction and relaxed the employee stock option (Esop) norms.
According to the proposals, an eligible start-up having turnover up to Rs 25 crore is allowed deduction of 100 per cent of its the profits for three consecutive assessment years out of seven years if the total turnover does not exceed Rs 25 crore. The turnover limit has been increased to Rs 100 crore and period of eligibility for claim has been extended to 10 years.
Currently, Esops are taxable as perquisites at the time of exercise. This leads to cash flow problems for the employees who do not sell the shares immediately and hold them for the long term. The Budget deferred the tax payment by five years or till they leave the company or when they sell their shares, whichever is earliest. The government also proposes to provide early life funding, including a seed fund to support ideation and development of early stage start-ups.
In order to encourage entrepreneurship the Budget proposed to set up an Investment Clearance Cell that will provide "end to end" facilitation and support, including pre-investment advisory, information related to land banks and facilitate clearances at Centre and State level. It will work through a portal.
The Budget also proposed a digital platform that would facilitate seamless application and capture of IPRs and a centre would be established Intellectual Knowledge Clusters.
However, the industry wants many regulatory hurdles to go. "MSMEs and start-ups are neck deep in managing the day-to-day complexity of multiplicity of licences, registrations, renewals, maintaining registers, managing returns among others. They end up seeking professional help from professionals and consultants in managing their labour and tax compliance. Budget has largely remained silent on serious reforms in Land, Labor and Contract Enforcement," said Rishi Agrawal, co-founder and CEO, Avantis Reg Tech. to work on Property. Translation