Budget 2022: Here's What Indian Start-Ups Expecting From The Budget

As the days are moving ahead to the budget day, which is February 1, the expectations of industries and industry experts are getting mixed reactions. Finance Minister Nirmala Sitharaman will unveil the Budget 2022-23.

Keeping the flow of expectations, the Indian Startups have requested the government to ease the tax load on the industry along with multiple expectations the startups ecosystem is eye on some big updates from the budget.

The Indian economy and the Startups, which are already reeling from the effects of the Pandemic are very hopeful with upcoming developments. The start-up ecosystem has raised their hopes and expects some big news for their continuous growth.

Startup-Friendly Policies

A group of indigenous startups suggested that the Union Budget 2022-23 should include new startup-friendly policies and tax relaxations to permit spending on innovation, ease-of-doing-business, and cutting compliance costs, in order to further benefit small enterprises and empower entrepreneurs. They emphasized that new reforms, policy aid, and support mechanisms aimed at building a targeted strategy to meet unmet financial requirements through technology will have a big economic impact.

Startups are looking for a progressive Budget, with an emphasis on fostering domestic entrepreneurs that solve problems for India. Expect the government to build a simple regulatory structure, laws, and standards for entrepreneurs so that they may operate their businesses without having to deal with bureaucratic red tape.

Increase contribution to the Fund of Funds for Startups

Startups also want the government to boost its contribution to the Fund of Funds for Startups (FFS), which would aid their growth. Easy loan disbursements, tax and compliance automation, paperless approvals, and incentives to embrace digital banking practices are all positive innovations that may help MSMEs expand.

Extending and Expanding the ECLGS program

For the majority of the next fiscal year, the government should consider extending and expanding the ECLGS (Emergency Credit Line Guarantee Scheme). Rates of interest in these programs should not be restricted, since this will incentivize lenders to make these funds available to micro-scale enterprises with significant operational costs. Capping interest diverts much of this money to larger firms, starving the most vulnerable micro businesses. The central government should support start-ups aiming to obtain loans in the forthcoming budget, regardless of language, literacy, geography, or source of income.

Eliminating the tax on some ESOP income

Last year, the government extended the deadline for claiming a tax vacation for startups by one year, until March 31, 2022, to promote them. Aside from that, the government has extended the capital gains exemption for startup investments by a year, until March 31, 2022, to promote financing. Many startups in the nation have pushed their employees to purchase Employee Stock Ownership Schemes in the previous year (ESOP). Deferring tax payments while exercising this option, as well as eliminating the tax on some ESOP income, would be a welcome addition to the next budget.

EV-Friendly System

The government is anticipated to unveil new steps to promote local electric car manufacture, make financing easier, and build an EV-friendly system. It is expected that it would be a good step to promote and expand the EV in the country. The EV Sector Startups are urging the government to decrease the GST on EV purchases and rentals from 5% to 2%. Consumers would be readily persuaded to convert to electric vehicles if the GST is decreased.