Its a no brainer that the last decade or so has belonged to India's startup ecosystem. Not only have startups been growing at a good pace, they are also helping the country's economy.?The data released by the Ministry of Commerce & Industry in itself gives a glimpse into this. It shows that there are more than 1,14,000 startups in India, which have in total helped in creation of more than 12 lakh jobs all over the country.?
So, given the key role that thousands of startups are playing in India's economy, its natural that they expect some more support from the government, right? Ahead of the upcoming interim budget 2024 which will be presented on February 1st by FM Sitharaman, here are some of the major expectations the startup industry have from the govt:?
Ahead of Interim Budget 2024, India's Digital Lending Association of India (DLAI) expects assistance from the creation of India Fintech Credit Fund (IFCF). The goal of this fund is to provide fintech companies with affordable and easily accessible financial assistance.
The fund can turn out to be helpful for small and medium-sized startups, as it can begin offering digital lenders wholesale financing at a competitive rate. This fund can also support women's credit, and also encourage fintech lenders to move horizontally beyond Tier-4 cities, and increase formal financing.
A crucial element for startups remains the need for continuous government support. That is why one of the key expectations by startups this time highlights the significance of relaxing regulations and granting access to more modern technologies. The current expectations regarding this are more funding, streamlined tax laws, and less stringent regulations to support entrepreneurship and promote expansion.
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In light of the current critical juncture in the Indian startup ecosystem, startups are looking to the government for crucial support. It is necessary to take steps like improving funding sources, providing tax breaks for R&D, and strengthening the regulatory structure. Incentives specific to ESG practices must be offered, ESOP taxation must be addressed, and capital gains tax on startup shares that are not listed must be aligned with that of listed shares.
Also, it makes sense to improve digital commerce initiatives like UPI, Rupay credit cards, and ONDC, given India's significant global influence in the startup ecosystem. Ahead of Interim Budget 2024, startups expect the introduction of tax breaks for fintech companies, incentives for retailers in rural areas, and funding for the improvement of last-mile connectivity for direct-to-consumer (D2C) e-commerce.
While this is not an expectation or area of of focus for all, the crypto startups in India are expecting the finance ministry to reduce the Tax Deducted at Source (TDS) rate from 1% to 0.01%.?In addition, it should also be allowed to offset losses against gains.?
Now it remains to be seen whether all or even some of these expectations are met by the Finance Ministry when the Union Budget is presented on February 1.
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