MUMBAI: Startups are seeking tax incentives for the sector in the next budget. For instance, the industry is seeking similar benefits extended to the manufacturing sector.
“Manufacturing companies have benefited from lower tax rates, encouraging activity in line with the ‘Make in India’ initiative. Similar tax incentives should be considered for startups, especially those working to strengthen the Digital India initiative. Startups are investing heavily in R&D and technology infrastructure. Incentives such as weighted tax credit and R&D employee expense subsidy will significantly boost R&D activities in the startup ecosystem and create more employment opportunities,” said Arpit Chugh, CFO, Razorpay.
Relaxing tax on Employee Stock Ownership Plans (ESOPs) for startups will go a long way in helping companies retain top talent, said Mayank Kumar, co-founder and MD, UpGrad. “While ESOPs are a good avenue for wealth generation, the tax rates are very high, making it a less attractive proposition for many employees,” Kumar said.
Meesho CFO Dilesh Bansal said lower taxes on ESOPs, which can currently be as high as 40%, will encourage more skilled professionals to join startups. Simplifying procedures related to tax compliance and lowering tax rates for startups will ease the financial burden on them, at least in the initial stages of operations, Bansal added.
Gaming startups, which have been hit hard by the GST rate hike, have sought clarity on tax in the Budget from the government. “We have urged the government to levy GST on gross gaming revenue/platform fees, which is the actual revenue received by the platforms. This approach will ensure the survival of the sector and encourage growth,” said Paavan Nanda, co-founder, WinZO. Startups have also sought clarity on the issue of angel tax.
“Manufacturing companies have benefited from lower tax rates, encouraging activity in line with the ‘Make in India’ initiative. Similar tax incentives should be considered for startups, especially those working to strengthen the Digital India initiative. Startups are investing heavily in R&D and technology infrastructure. Incentives such as weighted tax credit and R&D employee expense subsidy will significantly boost R&D activities in the startup ecosystem and create more employment opportunities,” said Arpit Chugh, CFO, Razorpay.
Relaxing tax on Employee Stock Ownership Plans (ESOPs) for startups will go a long way in helping companies retain top talent, said Mayank Kumar, co-founder and MD, UpGrad. “While ESOPs are a good avenue for wealth generation, the tax rates are very high, making it a less attractive proposition for many employees,” Kumar said.
Meesho CFO Dilesh Bansal said lower taxes on ESOPs, which can currently be as high as 40%, will encourage more skilled professionals to join startups. Simplifying procedures related to tax compliance and lowering tax rates for startups will ease the financial burden on them, at least in the initial stages of operations, Bansal added.
Gaming startups, which have been hit hard by the GST rate hike, have sought clarity on tax in the Budget from the government. “We have urged the government to levy GST on gross gaming revenue/platform fees, which is the actual revenue received by the platforms. This approach will ensure the survival of the sector and encourage growth,” said Paavan Nanda, co-founder, WinZO. Startups have also sought clarity on the issue of angel tax.
