Union Budget 2022-23: The finance minister may not have relieved us of greater tax burdens, but some respite was given to business, startups
Startups have emerged as a growth driver for the economy. Tax incentives for startups increased from three years to four years of incorporation, in view of the pandemic, the finance minister announced in Union Budget 2022. The key benefits for startups offered redemption of taxes for three years consecutively have been extended until March 31, 2022.
It is indeed gratifying to acknowledge that India has more than 61,400 startups recognised by the Department for Promotion of Industry and Internal Trade (DPIIT). More than 14,000 were added in the fiscal year 2021-2022, with most of them in the IT/Knowledge-based sectors which have remarkably grown in the past six years. Around 555 districts have at least one new startup.
Boon and Bane
Announcing the production linked Incentive Scheme (PLI) that is well appreciated, the finance minister (FM) said it has the prospect of creating more jobs and additional production of 30 lakh crore during the next keycap digits five years. This scheme will create a bursary effect on the Atma Nirbhar Bharat Abhiyan.
However, one of the pivotal needs for any startup to be given a tax holiday of five years remains unanswered. Also, the Union Budget 2022-2023 is clamping the GDP at 9.2 percent in the year 2022. Needless to mention, the post-pandemic recovery has been staggering and has created a crater in the Budget.
A balance– keeping in mind the loss of employment, increased health expenditure, higher fuel costs and inflated food prices, would have been a munificent gesture. A respite of lower taxes on income and GST would have been a welcome announcement with the backdrop of an ongoing pandemic.
Defence collaborations with startups
The finance minister also remarked that the Defence R&D will be unbolted for startups. With 25 percent of the Defence R&D budget opened to startups, private companies will be encouraged to collaborate to design and advance military instrumentality through the special purpose vehicle (SPV) model. In my purview, that will boost the growth of technology provided by startups just as the proposed setting up of a partnership between public institutions and farmers for the provision of technological services through the Public-Private Partnership scheme (PPP)
AI for ATMA NIRBHAR INDIA
The FM’s commendation on startups on macro and micro level growth is seen as an encouragement to technology-enabled development relying on virtual cycles with private investment and public capital investment. Another cheerful aspect has been the facilitation of Drone Shakti with ‘drone as a service’ with the aid of startups. The finance minister also remarked on the application and promotion of Artificial Intelligence to modernise and simplify operational processes across sectors.
The FM also emphasised the Government’s emphasis on ratification and adaption to technology-based solutions that will aid in creating sustainable development by and large, while helping to modernise the country. An optimistic gesture that shall be acknowledged and lauded by both the tech industry and consumers at large. Primarily, because in my conviction, technology binds citizens irrespective of rural and urban status. Needless to mention that it ameliorates into creating employment.
Although the Union Budget 2022-2023 may not have relieved us of greater tax burdens, it has given some respite to businesses and startups that have strived during the pandemic. This should incentivise and nurture the startup ecosystem while creating propitious sentiments towards entrepreneurship.
The writer is Vice President- Growth, Toch AI. Views are personal.