Budget 2019: Key Measures FM Nirmala Sitharaman Should Consider To Boost Startup Ecosystem In India

Budget 2019: Start-ups are disrupting traditional industries like never before and are poised to be one of the key pillars of growth for the economy. Few expectations in this regard are - An ‘exception based’ approach needs to be adopted for applicability of angel tax; Immunity to be granted from angel tax on past tax orders ; Current regulations impose many conditions leading to operational hazards for start-ups to claim exemption from start-ups – these conditions need a relook and further relaxed; Blanket exemption to be provided for all investments by Category II and Category III AIFs. Taxation on consolidation: The start-up sector is witnessing quite a few consolidations and the selling promoters/ investors often face liquidity challenges for making tax payments since at the time of consolidation, consideration is typically received in the form of shares of the acquiring entity. Carry forward of tax losses: Currently, benefit of carry forward of tax losses may not be available to start-ups even in cases where there is a small exit by the promoters or other investors. Capital gain tax exemption: To further boost investment in start-ups, government should exempt capital gains arising on sale of shares of start-up companies by investors either on a blanket basis or conditional basis upon redeployment of funds.