The announcement of tax exemption to start-ups as announced by Union Finance Minister Arun Jaitley on Monday has been given a cautious welcome by the sector. Many feel the exemption should have been extended to five years which would have allowed start-ups to compete with bigger firms.
Acknowledging the importance of the role of start-ups in generating jobs, Jaitley announced 100 per cent deduction of profits for three out of five years for start-ups set up during April 2016 to March 2019. The budget hopes that this will help in the growth of the start-up sector, which in the last few years have added much value to the economy. Pune has seen around $80-90 million funding in start-ups last year.
Welcoming the tax exemption, Ashwini Kashikar, director of American Vision – a Pune-based start-up, said that it should have been for five years as that would have helped start-ups to compete with the big and established companies.
“The Minimum Alternate Tax (MAT) is applicable for 2016-19 only if jobs are created, but what exactly are the additional benefits if we create more jobs. Overall, the budget had high expectations, but there are many areas which have been left unattended,” she said.
Gautam Rege, co-founder and director of Josh Software, said that the budget has talked about government initiatives towards Digital Literacy, but the details of the mission are yet to be disclosed. “The finance minister has spoken about integrating technology with the income tax department which will fasten the process. It will create new ventures for IT players and provide an opportunity for a healthy partnership. Small and medium companies which are creating solutions using niche technology will stand a chance to extend their services to improve the government systems. Overall this year’s budget was average in terms of meeting the expectations of the sector,” he said.
Umeed Kothavala, CEO, Extentia Information Technology, said that while the support to start-ups is in the right direction, but lack of long term clarity and vision will continue to hinder growth. “There is no significant or brave agenda around technology and overall it is an uninspiring and pandering budget,” he said.