Expectations By The Start-ups & Tech Industry From Union Budget 2017
Hold your breath! The Union Budget of 2017 will be announced on February 1 st . While business will be looking forward for new breaks, (as they have witnessed a nose dive during the last few months due to demonetization), the commoners will pray for some change in taxes and duties, waiting to see if the commodities they buy are going to become more expensive or cheaper. Every sector is busy preparing a wish list!
Let us hope that the upcoming Union Budget will iron out all the policy imbalances introduced in the Startup programme.
The Electronics & Telecom industry is expecting an inducement to boost the sector’s economy post demonetization impact.
With over 20 million units sold every month, India is the second-largest telecommunications market in the world. There has been a consistent growth of Smart phone users every month. 2016, has witnessed the manufacturing industry face many challenges. The announcement of demonetization dealt a heavy blow and curbed the overall manufacturing sector. The Telecom & Manufacturing sector is looking forward to the Union Budget to derive some exciting incentives.
The entrance of Reliance Jio, created an immense pressure with their more lucrative plans and offers. They have managed to anchor more to customers. Jio’s sudden rise has forced Vodafone to merge with Idea Cellular.
Currently, service tax at a rate of 15% is payable on telecom services. Any further increase in the tax under GST could have a direct impact on the increase in the cost for subscribers and overall the telecom industry.
“In order to ensure a uniform tax practice among taxpayers and eliminate unwarranted litigation, it is important for the Government to clarify that section 35ABA of the Income Tax Act, which is applicable from FY 2016-17, regulates spectrum allocated after April 1, 2016. The spectrum allocated prior to April 1, 2016 shall continue to be governed by section 32 of the Act,” said COAI DG Rajan S Mathews.
Mathews also reflected upon the need to bring attention on the issue of withholding discounts extended to prepaid distributors. “…In order to bring the ongoing litigation to an end, given the low margins earned by the distributors, a lower withholding tax rate of two percent may be prescribed for telecom distributors,” he further said.
India is gradually moving towards mobile banking. Smartphones will play an important role in supporting the vision of a digital economy. The entire country is looking forward towards mobile banking which can fuel the growth in mobile Industry.
Startups & E-commerce
While, the NDA government has often displayed its focus on developing the startup sector, the entrepreneurs still believe that they face few roadblocks which should be removed in this Budget.
Startups generally rely on the internet. They are waiting for the government to encourage digital payments, faster connectivity and reforms that make it easier for new players to set up their companies.
“Keeping the startup industry in mind, the most important thing for a government to do, is to steer clear of setting too many policies and rules as well as making doing business very straightforward and easy. Minimum governance is actually very good,” said Abhiraj Bhal Co- founder, UrbanClap.
“We hope that the government announces measures that can ease the friction experienced by users while executing digital transactions. While the efforts of the government on this front are laudable, we would like to see an enabling framework that allows innovative and seamless solutions to be operationalized for digital transactions. This would include permission to allow merchants and/or card networks to authenticate digital transactions in the background while providing users the ease of a one-click payment,” said Shweta Rajpal Kohli, Head-Public Policy, Uber India.
Arun Bhati, COO and Founder, Orahi said, “2015-16 has seen thousands of startups. Startup India is an excellent initiative that has helped startup, however 3 years of tax rebate does not help much as at takes at least three years for a startup to get to a viable level. Govt, should increase tax rebates to 5 years for startups, so that they can re-invest savings into the company”
The IT industry is looking for more rebates on desktops and other telecommunications equipment. “The IT industry has been seeking an extension of the excise duty differential benefit scheme to cover all ITA products including desktops, laptops, telecommunications equipment, etc. This would mean a zero duty on all inputs for manufacturing of electronic components and parts, including dual use inputs for all ITA-1 items which results in inverted duty scenario,” said Alok Ohrie, President and Managing Director, India Commercial, Dell EMC.
“Similar to the decision in 1998 to set aside a specific budget for IT across government projects paved the way for induction and adoption of technology throughout India, the government should consider setting aside at least 8 percent of its overall IT budget specifically for cyber security starting with the upcoming budget,” said Sanjay Rohatgi,
Senior Vice President, Asia Pacific and Japan, Symantec. “Alongside investment in infrastructure, we need to focus on developing a world-class and competent workforce.”
The ‘Digital India’ campaign has been a big boost to employment, infrastructure & economy that can help to create India as a self-dependent nation. These campaigns were aimed to increase the contribution of the manufacturing sectors in India’s GDP from 15% to 25%.
The Union Budget 2017 has held everyone with high hopes and expectations. This budget will also decide the future of Indian economy.