CUT THOSE START-UP TAXES

The ecosystem expects some relief on that front

INDIA’S BURGEONING startup ecosystem expects key tax reforms in the Budget that can resolve some of its long-pending woes. The most pressing demands are for friendly tax structures around employee stock ownership plans (ESOPs), legitimacy to crypto assets, expansion of the HRA provisions and direct overseas listing permissions. IndiaTech, a lobby group for start-ups, says the finance ministry should bring taxation clarity around crypto assets by formally naming them in tax laws besides the method of taxation and their disclosures. The group says cryptocurrencies be classified as digital assets and not currencies. It expects the government to extend the applicability of the ESOP relaxation benefits beyond start-ups registered with the DPIIT or listed under 80-IAC and IMB to unlisted firms as well as unregistered start-ups with a turnover below a certain threshold. IndiaTech has suggested abolition of taxation at exercise and levy of only capital gains between the exercise price and sale price at the time of exit. It has also recommended that required amendments be made to Section 10 (13A) of the Income Tax Act and Rule 2A of the Income Tax Rules, which would benefit employees to avail a deduction for rented furnishings and household white goods. The group also wants reconsideration on the applicability of Section 194 (O) which mandates 1 per cent TDS levy on all e-commerce transactions. It has also sought clarifications on applicability of Section 206C (1G) (b), which mandates collection of 5 per cent tax at source with PAN and 10 per cent without PAN from the buyer of an overseas travel package from any online travel portal. Companies are also looking forward to favourable regulations on direct overseas listing of Indian start-ups.