What Angel Investors Have To Say About The Budget #StartupIndia

The government has announced several new initiatives focused on growing Indian startups and here are some of the key highlights:

  • Company registration in 1 day
  • 100% FDI in marketing of food products produced and manufactured in India
  • Giving a call to SC, ST and women entrepreneurs, ‘Startup India’ has been initiated and Rs 500 cr been initiated
  • Hub to support SC ST entrepreneur for promoting job providers than seekers
  • Startups can claim 100% deductions on profits for 3 years
  • Entrepreneurship education training will be imparted in 2200 colleges, 300 schools and IITs and 50 vocational training centres.
Budget and Entrepreneurs
Budget and Entrepreneurs

Here are reactions from angel investors:

“The 3-year tax exemption for startups is indeed a positive move that will reduce compliance burden and cash outflows, allowing ventures to invest in product development and scaling-up the businesses. Exemption from capital gains tax is an expected move from this year’s budget and will encourage more high risk investments into the ecosystem. However, would have been great if capital gains tax regime for unlisted companies was aligned with that for listed companies at least for investments made by SEBI registered AIFs.

This would end the discrimination against domestic venture capital funds ( AIFs) as foreign funds anyway pay no capital gains tax by investing from Mauritius and other treaty friendly countries. By enabling one-day registrations for start-ups , the Government has focused on bringing in ease of business for the ventures. Many countries in the world do this already and, with the user of technology, I am sure this will get implemented expeditiously.” [Saurabh Shivastava, IAN]

“This is a hard working budget. We welcome the move to start rationalizing capital gains for investments in private companies, which will help create a level playing field relative to listed companies. However, the silence on removal of angel tax has been deafening.”  [Alok Mittal]

“Capital gains Tax exemption in regulated / notified fund of funds & lowering the period from 3 years to 2 years for definition of Long term Capital Gains in unlisted companies are both welcome. We had hoped that treating investments by AIFs and angel groups in unlisted companies would be aligned with the public market equity tax regime. We also welcome the SETU fund of Rs. 1000 crores to boost innovation and incubation and the one day registration process for start-ups will all help the eco system to grow.” Padmaja Ruparel, President, Indian Angel Network.

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