By Anjana Das
New Delhi, Dec 16 (IANS) The venture capital firms and startups, here on Monday, sought support in the next budget to make India top startup nation, while the software and BPO industry urged parity in corporate tax rates for manufacturing and services firms and tax Esops (employee stock ownership plan) at the time of sale and not at the time of exercising the option.
“We have sought on-shoring of the offshore fund. Today 85 per cent of funds are outside India. We have also urged building domestic setups so that Indian startups remain Indian and build the pillars for innovations and success creation in India.
“We are at number three position in startups and have to be number one. The key enablers for the ecosystem are institutional investors, like venture capitalists and private equity investors, who have to be supported,” Rajan Tandon, president of the Indian Venture Capital Association (IVCA), told IANS after a pre-budget meeting with the Finance Minister.
Ashish Aggarwal, Senior Director and head of Public Policy, Nasscom, told IANS, “We have told the Minister that we need parity in corporate tax rates for manufacturing and services firms and can be linked with different criteria in terms of investment and employment to drive growth in export competitiveness.”
“For the Deep Tech startup ecosystem, we need to attract capital, and to enable that the government should consider setting up a fund for Deep Technology-focussed areas”, Aggarwal said.
The Nasscom has also sought the taxation policy on Esops. “The point of collection of tax should be deferred. Taxation comes into play when Esop is exercised. We have sought it should be taxed only at the point of selling to make such Esops more attractive. The government should collect tax when an employee sells it not when he exercises it. This has been a major dampener,” Aggarwal said.
The Nasscom has also sought that IT and BPO firms should not be treated as financial intermediaries for the goods and services tax (GST).
“In GST, our industry has been facing problems since one year because we have been treated as financial intermediaries. The government issued a circular in July, but it was not well-drafted. At the September GST Council meeting, we were expecting a new circular. But it didn’t happen. Few days ago, the July circular was recalled. But it didn’t solve the problem. We need a revised circular that will state IT and BPO services are not intermediary services,” Aggarwal said.
Finance Minister Nirmala Sitharaman started her pre-budget consultations on Monday. The first meeting was with representatives of digital economy, fintech and startups.
The issues that dominated the discussion included digital infrastructure and role of government, regulation of digital economy especially in privacy, financial regulation, ease of doing business environment for startups, infrastructure gaps for digital India and taxation, the Finance Ministry said in a statement.
Finance Secretary Rajeev Kumar, Economic Affairs Secretary Atanu Chakraborty, Revenue Secretary Ajay Bhushan Pandey, IT Secretary Ajay Prakash Sawhney, Telecom Secretary Anshu Prakash, CBDT Chairman Pramod Chandra Mody, CBIC Chairman P.K. Das and Chief Economic Advisor K.V. Subramanian were present in the meeting.
Virat Bhatia, MD, Strategy & Policy, Apple India; N.K. Goyal, President, Telecom Equipment Manufacturers Association of India; and Pankaj Mohindroo, Chairman, Indian Cellular & Electronics Association were among the attendants.