Indian Finance Minister Nirmala Sitharaman, on January 1, 2022, presented the Union Budget even as the country faces fresh economic challenges amid another year of coronavirus pandemic. While presenting the Union Budget, Sitharaman made fresh announcements for the startups in the country while stressing on ‘Aatmanirbhar Bharat.’
The union budget’s contribution will be its core vision for the Indian economy to leapfrog into the future, riding on the digital economy, 5G networks, low-carbon rapid mass transit systems, drones and startups, powered by the bounties of clean energy and funded by sovereign green bonds.
Fund to be facilitated through NABARD to finance startups for agriculture and rural enterprise, relevant for farm produce value chain. Startups will support FPOs and provide tech to farmers.
Nagesh Basavanhalli, Group CEO & MD, Greaves Cotton Limited, said, “The Union Budget 2022 has some important announcements to accelerate economic growth by focusing on four core pillars of productivity, climate action, financing investment and PM Gati Shakti Programme which will help strengthen our infrastructure and MSME sector. The expansion of the National Highway network will provide better connectivity to our towns and cities and strengthen the supply chain network.
Overall huge impetus on rural growth through various schemes and technological intervention will help create more rural jobs and create more demand from rural and semi-urban areas. The government announced the production-linked incentives in several sectors would help generate more employment opportunities for the people.
Startups will be promoted to facilitate Drone Shakti through varied applications and a drone as a service.
Mughilan Thiru Ramasamy, CEO & Co-founder Skylark Drones said, “The union budget will provide impetus to the growth of the drone industry in India. The introduction of drone shakti is a welcome move and will ensure business momentum and drive faster adoption of UAVs in the country.”
“The announcement to promote the use of ‘Kisan drones’ in the agricultural sector as part of the budget for 2022-23 will enable the drone industry to collaborate with our farmers to improve operational efficiency and maximize profitability. This is a welcoming move and will make India’s agricultural sector future-ready.”
Startups have emerged as drivers of growth for our economy. Over the past few years, the country has seen a manifold increase in successful startups. Eligible startups established before March 31, 2022, had been provided a tax incentive for three consecutive years out of ten years from incorporation.
The budget proposed extending the period of incorporation of the eligible startup by one more year, up to March 31, 2023, to provide such a tax incentive.
S Durgaprasad, Co-Founder, Director and Group CEO, Bahwan CyberTek Group, said, “It is clear that technology will be a force multiplier in the coming months. And this year’s budget reiterates the government’s strong reliance on Digital for economic growth.
“The tax exemption for startups and the introduction of digital rupee using blockchain technology provide a stimulus for innovation and highlights the country’s appetite for emerging technologies. I’m confident that this budget will pave the way for a digitally transformed India equipped with all the resources for sustainable development at scale.”
A concessional corporate tax rate of 15 percent would be available for one more year till March 2024 for newly incorporated manufacturing companies.
Amit Singal, General Partner, Fluid Ventures, said, “Startups have got a boost in this year’s Union Budget. Among the many incentives proposed in the budget is the reduction of voluntary exit. The government has allowed a private limited company closure in 6 months of non-functioning. Earlier, they had to run the company for 18 months, even after closure, to avail of the benefit of the Fast Exit facility. This will help accelerate and provide relief to startups wanting to shut a business and encourage them to experiment.
The surcharge on Long Term Capital Gain (LTCG) has been capped to 15 percent, which is again an excellent move to bring more HNIs into startup Angel investment.”
With the Union Budget 2022 in place, there is now confirmation about launching a digital version of the rupee as a currency, a taxation structure for investments in virtual assets such as crypto coins.
Giving clarity on the taxation of cryptocurrencies and other virtual assets, Finance Minister Nirmala Sitharaman proposed a 30 percent tax on income from transactions in such assets. Also, to bring such assets under the tax net, she proposed a 1 percent TDS (tax deducted at source) on transactions in such asset classes above a certain threshold. Gifts in crypto and digital assets will also be taxed, she said.
Abhay Aggarwal, Founder & CEO, Colexion, Cryptocurrency, seems to have caught the government’s attention after FM recognized the currency as virtual digital assets. However, the most significant eye-catching part is the government’s decision on crypto taxation. It is noteworthy to consider this move as a progressive step towards monitoring, authenticating and regulating the crypto ecosystem in the country and bringing possible transformations.
The highlight of the budget for me is that India will be launching its digital currency by next year. It’s a historic move as people are finally clear that digital currency is here to stay and can make a rational choice while investing in cryptocurrency. I hope this catches on and banks, too, start getting involved with the crypto industry as well.