The Indian Budget 2023 is in the offing, and every industry pins hope on favorable soaps and incentives to acclerate not only growth in the business, but also pave way to create new job opportunities.
Indian Startups, venture capitalists, and IT companies continue to seeking further tax breaks to encourage investment and hiring in the sector, that is among the fastest growing industry in India.
In the run up to Budget 2023, the demands range from extending the availability of Employee Stock Option Plans to more startup employees to imposing a deadline for IT companies to finalise advance price agreements.
Startups want more employees to be eligible for the deferral of time for paying tax on stock options. The National Association of Software and Service Companies also recommended earlier this month that the delay option be made available to staff members of startups that have registered with the Department for Promotion of Industry and Internal Trade. Only startups with an Inter-Ministerial Board Certificate are eligible for the facility. If accepted, in the Indian Budget 2023, this will give startups a way to find and keep talent.
Additionally, companies and Nasscom want the minimum alternative tax (MAT) for qualified startups to be lowered from 15% to 9%. At the moment, there is no threshold for MAT requirements, therefore all businesses, regardless of size, are liable for them. Even if they assert an exemption under section 80IAC of the IT Act, startups are still required to pay MAT.
If MAT is reduced in the forthcoming Budget 2023, it will help smaller businesses meet their daily working capital requirements, especially during the initial days.
Today, 31 of the 36 States and Union Territories have a dedicated Startup Policy. 27 of these Startup Policies were developed after the launch of the Startup India initiative in 2016.
There is at least one DPIIT-recognized startup present in each of the 36 States and Union Territories
653 Districts host at least one DPIIT-recognized startup
Indian Budget 2023 – New Reforms can accelerate Funding in Startups which is witnessing downward trend
The venture capital (VC) investments in 2022 was one of doom. Venture capitalists and entrepreneurs constantly spoke of a ‘funding winter’. Many jobs were lost as startups started focusing on profitability. However, while the segment is seeing a reset after an exuberant 2021, it’s still at higher levels than in preceding years, suggests an analysis of Tracxn data of large deals.
Recent commentary from startup investors and pundits makes for grim reading, especially if you are an entrepreneur starting now. Global venture capital investment data from CB Insights reveals a sharp fall of 23% between the first and second quarters of the year so far.
Sequoia Capital cites the macroeconomic environment, geopolitical tensions, and turbulent financial markets to warn their portfolio companies about the impending downturn. Furthermore, Y Combinator has issued a 10-point advisory about raising and managing funds in light of the unfolding global economic situation.
Amid the global pessimism, the year also reinforced a key local trend—a gradual shift of funding beyond Bengaluru and the National Capital Region. If the Budget 2023 stimulates industry favorable reforms, then the investment and startup scenario will see remarkable change.
