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Budget 2016 For Investors : Not Much To Encourage Early-Stage Investment

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We’ve had post verdicts from all ends of the entrepreneurial community — startups, business veterans, founders, but haven’t had the same from “the most important cog in the wheel — investors”. So lets hear it from them on what they feel about this budget.

Anil Joshi, Managing Partner – Unicorn India Ventures

Union Budget 2016, the third from FM, Arun Jaitley had lots of expectation from startup community not only from investees but investors. While the budget laid emphasis on overall growth with a focus on infrastructure, agriculture, education, power, rural, etc, but also had startup as one of the agenda points. The FM had brought in the points emphasised by PM during ‘Startup India’ event as policy in this finance bill and has laid down the guidelines to define startup and how they can benefit from policies. The main focus of the budget was on rural development and promoting entrepreneurship. INR 500 Cr fund has been announced to promote entrepreneurship among women and Dalit entrepreneurs.

For startups though there were no big bang announcements as expected, a 100% exemption from profit in block of 3 yrs in a period of 5 years has been announced for startups, exemption on capital gain if investments have been made in notified startup or investment in fund of fund. Exemption to investors has been announced on long-term capital gain if investments are made in notified funds and long-term capital gain period has been reduced from 3 years to 2 years. These are all welcome steps for the startup ecosystem.

The expectations from FM were quite high mainly on bringing more vibrancy in the startup ecosystem, personally, I consider a balanced approach and above steps will certainly make a first step toward the vision of PM on Startup India.

Mahavir Pratap Sharma, Angel Investor – RAIN, Former Global Trustee – TiE

The budget for angel investors n start ups is lack lustre. As it does not address many issue like capital gains at early or seed stage, closure process for a company, co-invest with angels, having a policy in place for angels. Just a tax benefit where hardly a start up company makes any profit will not help in the long run.

Dr. Ajay Data, Angel Investor // CEO – Data Infosys

Its a budget which is quite positive for Startups. The 3 years tax holiday , 10% slab for patent income and long term capital gain on unlisted equity investment is down to two years are welcome moves.

However getting the SC/ST political card even in Startup and no direction for banks to fund startups is utterly disappointing.

Apoorv Ranjan Sharma, Co-founder – Venture Catalysts 

The union budget 2016-17 is a welcome sanction for the startup ecosystem with major relief announcements such as tax exemption for three years after setting up the company. Also, introduction of hubs to support SC/ST entrepreneurs is definitely a step ahead towards promoting Startup India, Standup India campaign across the nation. Instant and seamless registrations will further ensure that budding entrepreneurs receive the maximum support from the Govt.

However, it would have been great if the FM had included some reforms in order to accelerate angel investment model as well. Nevertheless, we hope this year will prove to be a good start towards taking the Indian startup industry to the next level.

Satish Kataria, MD – Catapooolt 

The FM has showcased great confidence in the Indian startup sector this union budget 2016-17 with profitable respite in key areas. With the tax reforms being exempted for three years, corporate IT rate reduced to 25% plus surcharge as well as non-taxing of capital gains on investments in regulated funds; startups stand a healthy chance of adding copiously to the economy. We at Catapooolt will actively play our role in this startup revolution and assist budding startups and entrepreneurs to showcase their mettle.

Sunil K Goyal, Founder and CEO – YourNest:

  • The period for Long Term Capital gains on unlisted securities is reduced to 2-years from 3-years.
  • Capital Gains can now be invested in eligible start-ups and specified Funds. Hopefully it shall include Category 1 Venture Capital Funds too.
  • Tax exemption for eligible start-ups for 3 years with a MAT is a sign of hesitation even in the case of highly innovative start-ups.
  • No relaxation on cash flow of start-ups on TDS in particular is a miss. Start-up tax is the biggest pain of our start-ups. Silence on start-up tax on equity funds raised at a premium is the biggest disappointment.
  • A special tax rate of 10% on patents developed and registered in India shall encourage our start-ups to file for Patents in India too.

Editor-at-large and co-founder at The Tech Portal. He is a tech enthusiast with interests in new-age technology fields like Ai, Machine Learning, AR/VR, Outer Space and related stuff. Drop him a mail anytime, very reachable.


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