Union Budget 2019: Post Budget Reaction of the Startup Community

The 89th Union Budget presented by Finance Minister Nirmala Sitharaman, on 5th July 2019, as expected has brought several remarkable provisions for the Indian startup ecosystem. One of the most important moves is that of easing out the much debated ‘angel tax’. She also proposed a system of e- verification of investors and the source of investor's funds.  Some other regulations made in favor of startups in this budget are-

  • Valuation of shares issued to category – II Alternative  Investment Funds to fall beyond the scope of Income Tax scrutiny.
  • Extension in period of exemption of capital gains from the sale of residential house for investment in startups up to March 2021.
  • Reduction in GST and Income Tax rates for Electric Vehicle (EV) makers, which will provide much relief to the EV startups.
  • Expansion of Women SHG Interest Subvention Programme to all districts to encourage women entrepreneurship.
  • 100% FDI in insurance and single brand retail.
  • Setting up of 80 ‘livelihood business incubators’ and 20 'tech business incubators' in FY19-20
  • Starting up of a new TV programme on DD especially for the startups.
  • It  proposed that businesses with an annual turnover of over Rs 50 crore can offer low-cost digital modes of payments and no charges or Merchant Discount Rate (MDR) will be imposed on them or their customers

The Startup Community has welcomed the budget and appreciates the measures included. Let's hear from some startup leader regarding what they feel about the initiatives taken by the Government in this Union Budget (2019-2020) and what more they expected from it.

Bhaskar Majumdar

Managing Partner, Unicorn India Ventures

This Budget has been a good budget for the startup community. FM announced doing away with Angel tax. This has been a long-standing demand of the industry and we welcome this move. Apart from Angel tax, 2 other good areas to broad base and foster spirit of entrepreneurship in tier 2 and 3 cities by launching ASPIRE incubators in tier 2 and 3 cities.

Overall push to the digital economy by removing charges on digital transactions and putting a surcharge on companies withdrawing more than a crore every year will have a positive impact on accelerating the digital economy and bring more transparency in transactional data. Bharat Net focus on tier 2 and 3 cities will also boost the digital economy. s

I think 2 aspects that may have gone unnoticed is the Social stock exchange through which social entrepreneurs will be able to raise money and global investors meet which the govt is planning will obviously boost early stage investment ecosystem here.

Anand Naik

Co-founder CEO, Sequretek

Really appreciate the continued attention given by this government to startups and SME sector. The startup initiatives outlined in this budget are very encouraging and will further foster the innovation environment in India. Ease in accounting for Angel tax, incubators and removal of charges for cashless transactions are all very positive steps to create more startups and thereby creating jobs in this sector.

Prithvi Singh

Founder and CTO at Gameskraft

We at Gameskraft appreciate the Union Budget announcement by the Hon. FM. The announcement in connection to address issues faced by entrepreneur and startup community is a relief. With the implementations of the policy discussed startups, especially who are dependent on angel investors, will be able to operate the business without much of a hassle.  The no-scrutiny by IT dept encourages small angel investors to boost the ecosystem. The initiative of kick-starting TV channel program will help to reach out to more people and also investor community thereby becoming an encouraging platform to boost startup culture in India.

Gotama Gowda

Co-Founder and CEO, Openapp

It is encouraging to see that the 2019 Budget has given prominence to the startup community. On a lighter note, the Startup TV channel is going to make Superstars out of Entrepreneurs, while there are a few now, there will be a lot more as the country is moving towards celebrating Entrepreneurship, which is a good move. The most awaited announcement was the ease of angel tax regulations, where the govt. has not just heeded to what the industry was gunning for, but has got in the right set of checkpoints to ensure the right kind of money is coming in.

Bharat Net is a great push and the fact that it is going to be a PPP model is much better than the government itself taking it forward. Unlike the last term, there is prominence and the only expectation is that this time around, the right partners are found to enable connectivity and is actioned as soon as possible.

Rapid urbanization, Insurance and Infrastructure, especially in the housing sector with reduced home loan rates, will increase the need for enhanced safety & security. The 100% FDI in insurance intermediaries, will give rise to more players in the segment eventually bringing in competitive rates, which is healthy for the industry. As for a company in security and surveillance, Insurance is an industry that goes hand in hand. This will improve the investor focus in the sector, and will also improve the wave of strategic foreign investors.

Pravin Agarwala

Co-Founder and CEO, BetterPlace

Creating more jobs is the need of the hour. Skilling people to meet the industrial needs and at the same time creating local jobs by promoting local entrepreneurs in agri and related fields will definitely boost the opportunity for people. I think we should also keep promoting SME's with better access to credit and keep growing the startup ecosystem which is actually creating a lot of new jobs. Well done. Looking forward to the execution now.

Amit Kumar Singh,

Chief Digital Officer Mantis Technology Pvt Ltd

There are many positive takeaways from this year’s budget. Especially, for startups and SMEs that operate in the road transportation industry. Apart from initiatives like the Bharatmala project, fresh fund allocations towards the construction of 1.25 lakh kilometers of roads under phase III of PM Gram Sadak Yojana, as well as the development of 17 iconic tourism sites, will benefit the entire industry. We are also happy with the government’s decision to launch the National Common Mobility Card (NCMC) as it will come as an added advantage for both travel operators and commuters. Other initiatives such as the push for EV adoption, removal of angel tax, rationalization of GST and support for retail traders will further help us to scale our business.

Dinesh Kumar Kotha

Co-founder & CEO of Confirmtkt

Budget 2019 is here, and it sure brings in new hopes and opportunities for us. The Honourable Finance Minister has proposed that the Indian railways will use a PPP (Public-Private Partnership) model for faster development and delivery of passenger freight services. At present, there is a massive demand for train tickets. Hopefully, the PPP will enable the railways to add more trains and coaches so there is enough supply of seats to meet this demand. This, in turn, will contribute to industry growth. Currently, only 4% of India is directly connected through railways which comprises of 4 lakh routes. If new trains are added or railway lines are extended, the railway connectivity will increase manifold.

For startups, the government finally addressed the Angel Tax issue – startups and investors who file requisite declarations won’t be subjected to any kind of scrutiny in respect of valuation of share premium. This will prevent many startups from closing down due to fund shortage. However, there were no announcements made on providing greater access to finances (working capital loans, credit lines, funding, etc) to startups. Nevertheless, the Budget 2019 seemed to be well thought out

Ms. Naina Ruhail

Co-founder, Vanity Wagon

The budget '19 shows a ray of positive light for the startups in the future - with the Doordarshan bouquet program, no liability to paying Angel tax, a provision to carry forward and set off losses and also exemption from capital gains under certain provisions. These and a few more provisions (FDI relaxations) show the inclination of the current government to make India a positive landscape for startups and ensure that companies like Vanity Wagon would be favored by policies going forward".

Mr. Pratik Marwah

Chief Operating Officer (COO), iAugmentor

It was good to have our Finance Minister Nirmala Sitharaman presents her maiden Budget that will put India on the road to a $5 trillion economy by 2025. was a neutral budget on India's growing startup ecosystem, reflecting government's intention to increase the support to our entrepreneurial journey. The Finance Minister has laid out the plan during her speech mentioning the goal of establishing 50,000 startups by 2024 set by President Ram Nath Kovind.

Indian startups are growing continuously, and the government of India has encouraged them by resolving ‘Angel Tax’ issue, startups and their investors filing requisite declarations and provide information in their returns will not be subjected to any kind of scrutiny in respect of valuations of share premiums.

Also, it a great relief from the issue of establishing the identity of the investor and source of funds by the introduction of the e-verification mechanism. FM has also proposed an exclusive TV channel, which will be operated under the Doordarshan umbrella and will also help in matching startups with venture funds and investors, this kind of initiatives by GOI is a positive approach to make the start-up ecosystem stronger.
With this kind of budget, I am sure the start-up ecosystem will hold a strong part in Prime Minister Narendra Modi's vision to turn India into a great nation.

Mr. Vivek Jain

Chief Business Officer - Shiksha.com, Naukri FastForward  

The GIAN initiative is a positive step as the quality of teaching is the building blocks of our education system and requires improvement at various levels. I am sure if it's implemented properly there will be many Indian institutions in the top 200 global institutions bracket. The study in India program will enable Indian Institutions to build a global reputation. Focusing on relatively newer areas like AI, Big Data, Robotics will also increase the pool of good talent in these high demand areas.

Mr. Ayush Bansal and Shubham Sharda,

Co-founders of Foxmula

'Study in India' can prove to be one of the best initiatives, with Institutions implementing Industry-oriented skill development with exposures. As the technologies create new pressures on career scopes, upskilling, reskilling and continuous learning initiatives will be key to ensuring both that individuals have access to economic opportunity by remaining competitive in the new world of work, and that businesses have access to the talent they need for the jobs of the future.

Nikhil Dosi

Co-Founder, Grexter living

Rental housing has been on an exponential growth curve over the last couple of years in India and the trend is set to continue. Tenancy   Reforms will act as the backbone of the rental housing sector and will help in promoting this segment. This will enable active participation of private sector which in effect will improve the quality of living.

This is precisely what we do at Foxmula in an ecosystem, giving EdTech a magic touch and increasing employment by minimizing the skill-gap of the employees. Foxmula has already begun to dig deeper into the new Technologies and getting out the hidden talents from the Country. Not only we focus on developing the industrial skill set towards it but also create a Job ready profile with Global Certifications and Industrial Exposure via Internships. I must say, at Foxmula we are discovering some amazing talents for New Technologies, who never had an idea of it before. It's great to see the Government realizing and acting towards it at the right time, with growing investments in the domain. We look forward to working with the Government in the near future.”

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About Chayanika Goswami

Chayanika is an MBA in Finance and a trained Digital Marketer. SEO and content writing are her hobbies turned profession. She is a rover. In her free time she loves travelling and cracking jokes.