How to maintain an Innovation Culture : From Budget 2019 to 2020

How to maintain an Innovation Culture: From Budget 2019 to 2020

Recognizing the efforts of the government to remove the bottlenecks for entrepreneurs is critical. Under the current ‘ Startup India Vision 2024 ‘ scheme, the government has announced the establishment by 2024 of at least 50,000 new startups, 500 new incubators, and 100 innovation zones.

With the beginning of a new year, maybe now is a timely time to take stock of how the 2019 Union Budget has influenced the startup community. Six months later, let’s remember the start-up budget highlights.

Among the sop bonanza provided to startups was the freedom from the angel’s tax heat. In an attempt to alleviate the difficulties arising from the controversial Angel Tax, the Minister of Finance declared that paragraph 56(2)(viib) of the Income Tax Act does not extend to a startup registered with the Department of Industry and Internal Trade (DPIIT). In order to further simplify the Angel Tax issue, the budget also stipulated that startups and their investors who file required declarations and provide information on their returns will not be subject to any sort of scrutiny with regard to sharing premium valuations. In fact, companies receiving funds from private equity firms and real estate funds are now excluded from oversight, in order to meet the demands of the burgeoning investment community.

In a positive turn for eligible startups carrying forward losses from previous years, the budget relaxed norms on meeting either of the two conditions: continuity of 51 percent shareholding or continuity of 100 percent original shareholders. The new provision will help start-ups offset tax liabilities until they start making profits, as well as recognizing that their shareholding pattern may change as start-ups mature.

The budget has given an enormous boost to women entrepreneurs a  which is appreciated. In addition to giving more loans with lower interest rates, the Stand Up India Scheme for Women Entrepreneurs was extended until 2025.

Other happy news for entrepreneurs includes an e-verification system to save start-ups from further scrutiny from the Income Tax Department, a dedicated television channel for start-ups, the creation of a grievance redress platform for start-ups and the extension of capital gains exemptions from the selling of a residential house for start-up-centered investments until FY 2021. Efforts are under way to update and streamline the complex structure of labor law in India into a consolidated bill.

Setting up new business opportunities

Recent efforts by the government to remove bottlenecks for entrepreneurs must be noted. Under the current ‘ Startup India Vision 2024 ‘ strategy, the government has announced the establishment by 2024 of at least 50,000 new startups, 500 new incubators, and 100 innovation zones.

In an attempt to provide superior infrastructure or platform for potential innovators, the Reserve Bank of India (RBI) has announced the release of a proper system for real-time testing of financial products. As the platform proposed would serve as an instrument for entrepreneurs to test their business models, the highest priority will be given to protecting consumer interests

Eliminating Startup Speed-breakers

While the government can rightly claim that the budget is a move in the right direction to keep India at the forefront of the start-up revolution, there are still many challenges for entrepreneurs. The startup community believes, for example, that more can be done to relax the angel tax regulations and further improve the program.

The government also has to tackle pending ambiguities about the Income Tax problems of startups. For starters, investors are worried about the high 28.5 percent tax they will have to pay for startup investments.

Although angel tax will not apply to companies registered with the DPIIT, the law has not been eliminated entirely. While the government is in principle changing the taxation environment for entrepreneurs, according to PwC India, in practice startups can still be penalized for non-payment and evasion of the angel levy. Entrepreneurs are seeking further clarification as to whether the angel tax still applies to companies which have received IT notifications.

Building a robust innovation roadmap

Given the current challenges, the outlook for India’s technology industry looks bright. The Fourth Industrial Revolution has certainly created a goldmine of prospects for business people all over the world. While India is poised to harness new technologies like AI (Artificial Intelligence), machine learning, IoT (Internet of Things), and blockchain, startups need to comply with the new digital period. Main players for India to achieve its $5 trillion economic dream.

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A GST changes plan (Detailed Blog)

GST, two years after its commencement, has demonstrated to be a crazy ride for all stakeholders. The GST routine has been set apart by nonstop change. What are the basic undertakings ahead?

Actually, GST rates should have been steady, GST approach ought to have had a clear guide and technology ought to have been adaptable. However, GST rates are developing, GST policy is experiencing changes and technology is rigid (not staying aware of the pace of progress).

The GST Council has met 35 times and proceeded to roll out various improvements in GST legislation. Unquestionably it’s an accomplishment to direct such a significant number of gatherings and collectively address such huge numbers of issues. However, handy solutions and changes in the GST law have brought uncertainty in the plan of GST.

Given this, it will be ideal that, going-ahead, a definite long haul guide for GST strategy ought to be readied. This would involve some of the following micro and macro moves:

Micro moves:

Join GST cash ledger  and CGST credit ledgers: At present, the GST payers need to store money in independent cash ledgers , (for example, CGST, SGST and IGST). Rather, of this in the event that just one cash ledger is endorsed, at that point, the issue of GST  in incorrect GST heads, will be nipped in the bud.

Use of CGST: Utilization of CGST credit is currently confined to State-wise crates, however, pan India, there is just a single Central Government. Given this, similar to the recent service tax routine, the choice of cross-usage of in any event CGST credit crosswise over India ought to be explored.

Address place of supply Challenges: In GST enactment there are different arrangements which increment the likelihood of wrong assurance about whether an exchange is an ‘intra-State’ or ‘between State’ (however in both case the duty rate will stay same state 18 percent). Be that as it may, if intra-State supply is wrongly treated as inter state supply or vice versa, the tax payer is required to make tax requested and afterward can guarantee the discount of the incorrect tax paid. This prompts extra consistence load. On the other hand, inter-Government adjustment could be explored.

Diminish Data accumulation focuses: GST payer is required to record E-way charges, GSTR-1, GSTR-3B, ITC-04, Annual return and Annual Audit (if pertinent). Indeed, even under the proposed return framework there are three returns. Assortment of profits passes on absence of trust in the GST payers.

Auto-populate Import Details: At present, import information isn’t associated with GST entry, prompting duplication of subtleties by the merchants. By connecting IGATE with GSTN), the legislature can diminish the consistence weight for the GST payer.

Make receipt coordinating a yearly exercise: It is recommended that after July 2019, ITC will be accessible just based on coordinating of ‘solicitations’. Viably, through this arrangement, the GST payer is loaded with the duty of guaranteeing that every one of their sellers pay GST and record returns. It might be noticed that in Income Tax, the TDS subtleties are followed, yet at a ‘Container level’. Accordingly, while the coordinating could be proposed in GST, be that as it may, it very well may be on GSTIN level (so if a provider has issued 800 solicitations to a purchaser in a month, just all out GST for the month will be taken a gander at as opposed to the 800 solicitations). Further, if conceivable, the coordinating can happen yearly.

Introduce GST levy archive: At present, in excess of ten rates are relevant on merchandise and enterprises. This has brought about making grouping and rate distinguishing proof a basic exercise (as there is no extract tax like report which a GST payer can allude to).

Given the aforementioned, like Central Excise Tariff, the Government may consider presenting a duty of GST rates, for the two merchandise and enterprises. In the event that the levy depends on universally acknowledged characterization, at that point it will help address grouping issues.

Empower ASP/GSP/fintech applicable: Currently, the GST site does not work on the due date of recording of GST returns. Along these lines, to address the above test, the Government can utilize the administrations of different application engineers like ASP/GST/Fintech and making redid applications which will be increasingly useful.

Macro scale moves:

Bring Electricity and oil division in GST: Non-consideration of indicated oil based goods implies neither can oil segment elements guarantee info assessment credit of GST charged to them nor can the organizations purchasing these oil based commodities, (for example, paint industry utilizes couple of oil based commodities as information sources) guarantee credit bringing about falling of duty.

Thus, rejection of power part prompts forswearing of credit on sun powered power plant/wind power plant and has antagonistic effect on the legislature’s ‘sustainable power source mission’.

Address real estate sector challenges: GST is exacted on exchanges of merchandise and enterprises which are ordinarily expected for utilization. Aside from utilization, there are sure acquirements, which are for utilization as well as rather a venture road. One of such model is gold acquirement which draws in GST @ 3 percent (with ITC). Land segment, similar to gold, is a road for speculation (wherein a large portion of the home purchasers contribute their life time investment funds) than utilization and in this way, collecting GST @ 5 percent on pads (other than reasonable) without ITC sums to demanding expenses multiple times (input saddled supply, 5 percent on yield and 7 percent stamp obligation).

Along these lines, GST on land could be brought down to state 3 percent and duty of GST on improvement rights ought to be genuinely exempted. This will likewise help in the ‘lodging for all’ mission.

For detailed information, contact Certicom Consulting.