Startups seek tax sops available to manufacturing sector

MUMBAI: Startups are seeking tax incentives for the sector in the upcoming Budget. The industry, for instance, is batting for similar benefits which have been extended to the manufacturing sector.

"Manufacturing companies benefit from lower tax rates to boost activities 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 invest heavily in R&D and tech infrastructure. Incentives such as weighted tax deductions and subsidies for R&D employee costs would significantly promote R&D activities in the startup ecosystem and create more employment opportunities," said Arpit Chug, CFO at Razorpay.

Easing Esop (employee stock ownership plan) taxation for startups would go a long way in helping companies retain talent, said Mayank Kumar, co-founder & MD at UpGrad. "While Esops are a good wealth-creation tool, tax rates on them are very high and it does not make it a very attractive proposition for lot of employees," Kumar said.

A reduction in Esop-related taxes, which can currently go as high as around 40%, will encourage more skilled professionals to join startups, said Dhiresh Bansal, CFO at Meesho. Simplifying processes associated with tax compliance and lowering tax rates for startups, at least during the initial years of operation, will ease their financial burden, Bansal added.

Gaming startups, which have been hit hard by a higher GST rate, are looking for tax clarity from govt in the Budget. "We have urged govt to levy GST on gross gaming revenue/platform fees, which is the actual revenue received by a platform. This approach will ensure the sector's viability and foster growth," said Paavan Nanda, co-founder at WinZO. Startups are also seeking clarity on the issue of angel tax.


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