Budget 2019: PM Modi’s ‘New India’ targets 50,000 new start-ups by 2024
Since the Interim Budget 2019 did not have much in store for the start-up industry, it is expecting key changes in regulations and start-up schemes this time, as promised by the BJP in its 2019 Lok Sabha Election manifesto
The newly formed NDA’s government’s first full Budget will be announced on July 5. Since the Interim Budget 2019 did not have much in store for the start-up industry, it is expecting key changes in regulations and start-up schemes this time, as promised by the BJP in its 2019 Lok Sabha Election manifesto. In its manifesto, the BJP promised to establish around 50,000 new start-ups by 2024. The BJP also assured to establish around 500 new incubators and accelerators, and 100 innovation zones under urban local bodies. Other prominent promises made by the BJP include collateral-free credit up to Rs 50 lakh, easing the regulatory requirement for startups, targeting time spent for tax compliance, among others.
“To encourage the spirit of entrepreneurship amongst the youth, we will launch a new scheme to provide collateral-free credit up to Rs 50 lakh for entrepreneurs. We will guarantee 50 per cent of the loan amount for female entrepreneurs and 25 per cent of the loan amount for male entrepreneurs,” the BJP said in its election manifesto. The party had also promised to promote and encourage startups through the creation of ‘seed Startup Fund’ of Rs 20,000 crore.
The previous Modi government was able to address a major concern around the contentious angel tax, but the start-up industry is expecting more. Though there was no major announcement regarding angel tax during the Interim Budget, the February 20 announcement by the Centre gave a much-needed breather to start-ups under which they were given the exemption of up to Rs 25 crore from Section 56 (2) (viib) (also called angel tax) of the Income Tax Act. However, the businesses want the limit to be raised to Rs 50 crore. The issue drew attention after some start-ups received notices to pay angel tax. After the decision was announced, as many as 342 start-ups had been exempted from angel tax between the February-April period.
However, one of the areas the government had not touched upon in its Interim Budget was Section 68 of the Income Tax Act. The section pertains to a start-up attracting tax liability in case it is not able to explain the source of capital or funding it gets. Under this section, the government had earlier taken action against some start-ups. The start-up community would be expecting some kind of relief on “unexplained fund receipts” during the Budget 2019.