While the Budget 2017 did not bring any big bang announcements for VCs and angels, investors feel that a push to digital transactions will help financial tech startups in the long term. Some feel that simplification of compliance, getting funds from overseas investment firms and some benefits to angel investors would have helped.
While the Budget 2017 did not bring any big-bang announcements for VCs and angels, investors feel that a push to digital transactions will help financial tech startups in the long term. Some feel that simplification of compliance, getting funds from overseas investment firms and some benefits to angel investors would have helped.
Here are what some of India's startup investors feel about Budget 2017:
Sunil K Goyal, founder and CEO, YourNest India VC Fund
No Robinhood announcements: “For AIFs, we already have absolute clarity on taxation. In case of Venture Capital Funds also, the taxation regime is quite conducive. For startups and MSMEs, a tax rebate of 5 percent up to revenue of Rs 50 crores, MAT carry forward for 15 years and the extension to 7 years for availing the 3-year tax holiday, shall leave some much needed cash in their coffers. The 5 percent tax rebate will also benefit Asset management companies. Overall, we are happy with the consistency of approach and no sudden Robin Hood like announcements.”
Apoorv Ranjan Sharma, Co-Founder, Venture Catalysts
Small online merchants will get a boost: Union Budget 2017-2018 is a progressive economy Budget. For the Startup economy, there is a significant relief in deductions within profit-linked available to seven years from the current five years. Furthermore, the deduction in corporate tax is a great boost for the companies with turnover of 50 crores or less. Besides, SMEs with turnover up to Rs 2 crore, will enjoy tax relaxation from 8 percent to now 6 percent. The move is going to waive off the financial burden, while propelling small merchants on their path to success.
Rohit Chokhani, Principal Founder, White Unicorn Ventures
Desirable to have SME taxation at 18 percent: Consistency over big bang reforms was chosen in this Budget. The most positive outcome was Affordable Housing given the Infrastructure Sector, which would generate a massive push, as my international players will flock this sector. The other push was for SMEs, the most prominent announcement of reduction of tax to 25 percent for companies upto turnover of 50 crores is encouraging. Most importantly larger corporations after their incentives and rebates the average rate was 25.90% of tax. It was desirable that SME's taxation to be at 18%, and no minimum alternative tax for startups.”
Vikram Gupta, Founder and Managing Partner, IvyCap Ventures
Ban on high cash transactions to help: The 2017 union Budget didn’t have many sops for startups other than the MAT extension of period of carry forward from 10 years to 15 years, the challenge still remains in terms of actual cash flow for the startups.
The main positive aspect which I see for startups and SMEs for companies with less that 50 cr of turnover is that tax rate has been reduced from to 25 percent which should come as a big relief for startups.
Secondly the target of about Rs 2500 crore of digital transactions over the next 1 year facilitated through BHIM, UPI usage should be an interesting area to look at. The fact that cash transactions of over Rs 3 lakhs are now not permitted and that the cash expenses allowance is reduced to Rs 10,000 should benefits the online payment companies.
Gopal Srinivasan, Chairman, IVCA
It’s a pro-startups Budget: The Budget has clarified an important point that the “Cumulative Convertible Preference Shares (CCPS)” once when converted will be completely tax efficient. Coming to start-ups, the Government has mentioned that they will be eligible for loss benefit and a startup deduction for any three years in a period of seven years. We appreciate the need that the genuineness of transfer is important when shares are sold on LTCG to gain exemption from long-term capital gain tax. It is important that SEBI registered VC/PE funds, such as Domestic Venture Capital Funds (DVCFs), AIFs 1 & 2 are included in this notification. IVCA also welcomes the reduction of holding period for long term capital gain eligibility for real estate to two years.
Aditya Gupta, Chairman, Quarizon
More benefits to angels needed: “This year Union Budget has some positive measures for the startup ecosystem. The increase time span to first seven years for 3 years tax deduction is a positive move as there are very few startups which are able to achieve profitability in the first few years of existence. Simplification of investment norms and more benefits to angel investors would have further strengthened the startup eco-system. Also, promoting the digital economy is a great step and this will be a boost to fin-tech startups.”
Sharad Sharma, angel investor and co-founder iSPIRT
Budget may expedite flow based lending: Key Budget announcements include – enabling e-KYC and transaction history based lending, presumptive income tax scheme for digital adoption, promoting the BHIM app with cashback and referral schemes, Aadhaar based smartcards, etc. By removing regulatory cholesterol around digital payments, the Budget sets the stage for a revolution in flow-based lending.