TS Darbari Blog: Benefits for Start-Ups in Budget 2021
TS Darbari says that everyone was waiting eagerly for the budget for 2021. After the pandemic, the economists, the entrepreneurs, employees and employers everyone had a lot of expectations from the budget. Finally, India’s Finance Minister Nirmala Sitharaman presented the Union Budget 2021 on February 1, 2021 — with a sharp focus on digital transformation and the next phase of economic recovery after the Covid-induced market recession. TS Darbaru further says that she also ditched the bahi khata that had become a major talking point during the longest budget speech ever last year and went with a ‘Made in India’ tablet which, itself is highly symbolic, tells us that India is committed to be self-reliant in every sector. Besides this, the focus was also around key sectors in the digital economy with increased spending for healthcare, education and employment generation in manufacturing and infrastructure.
TS Darbari further says that delivering her budget address, the FM projected a fiscal deficit of 6.8% of gross domestic product for 2021–22. The current year was expected to end with a deficit of 9.5%, she said, a sharp rise from the 7% expected earlier. Despite this, the FM was bullish about the recovery of the Indian economy.
Talking about the GDP growth rate, TS Darbari said that earlier, the Economic Survey had projected a GDP growth rate of 11% for the fiscal year 2021–22. Whether the government’s spending boost gives the thrust to key sectors to achieve this benchmark remains to be seen. In the meanwhile, here are the key highlights from the Union Budget 2021–21 for startups.
TS Darbari says that now let’s discuss more the benefits of this budget for start-ups and entrepreneurs.
TS Darbari says that key takeaways From Union Budget 2021–22 For Indian Startups are as follows:
The primary focus areas of the budget were healthcare and generating jobs by increasing the government’s expenditure across sectors even as the country struggles to bounce back from a pandemic-induced recession.
Tax Holidays For Startups; Exemptions For Investors
Besides the new definition for small businesses, Sitharaman also proposed an extension of the tax holiday to startups by another year to March 31, 2022 during her Union Budget 2021 address. Moreover, she also announced that in order to incentivise investment in startups, the government is proposing extending the eligibility period of claiming capital gains exemption for the investment made in the startups by one more year to March 31, 2022.
In the Union Budget of 2017, the then finance minister, the late Arun Jaitley had announced that startups that were incorporated after March 31, 2016 could avail a tax holiday for three out of seven years, from the date of incorporation. Startups can avail this exemption provided that annual turnover does not exceed INR 25 Cr in any financial year.
Insurtech Gets FDI Booster Shot
Among the key decisions from the Budget was the proposal to amend the Insurance Act, 1938 to increase permissible foreign direct investment limit (FDI) from 49% to 74% in insurance companies at the Union Budget 2021.
Fintech In Focus
TS Darbari says that the Indian government proposed allocating INR 1,500 Cr to boost the penetration of digital payments as well as other measures to boost financial inclusion.
Finance Minister Nirmala Sitharaman, while presenting the Union Budget for 2021–22, has proposed to set up a “world-class” fintech hub near Gujarat capital Gandhinagar at GIFT City (Gujarat International Finance Tec-City) which according to TS Darbari is good move.
Besides this, the government will also introduce a bill to set up development financial institutions (DFI) with an outlay of INR 20,000 Cr to boost credit access for small businesses, MSMEs as well as those working in areas of focus such as manufacturing and infrastructure.
TS Darbari further adds that to further facilitate credit flow under the scheme of Stand Up India for scheduled castes and tribes, as well as women entrepreneurs, the government has proposed to reduce the margin money requirement from 25% to 15%, and to also include loans for activities allied to agriculture.
According to TS Darbari, there are several other points in the budget which are commendable and we can say that the budget is highly visionary and it would surely be beneficial for startups. TS Darbari says that the budget is a booster shot for Make in India and Atmanirbhar Bharat and shows the government’s commitment to becoming a self-reliant and self-sufficient nation.
Who is TS Darbari?
TS Darbari is a top management professional, with several years of rich & diversified experience in Corporate Strategy, New Business Development, Sales & Marketing, Commercial Operations, Project Management, Financial Management and Strategic Alliances.
Who is TS Darbari?
TS Darbari is a top management professional, with several years of rich & diversified experience in Corporate Strategy, New Business Development, Sales & Marketing, Commercial Operations, Project Management, Financial Management and Strategic Alliances.
