India’s budget boosts startup, e-commerce ecosystem; silent on digital assets
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India’s finance minister, Nirmala Sitharaman, has abolished the ‘angel tax’ to bolster entrepreneurial spirit and support innovation. However, she remained silent on requests from the digital asset industry to lower taxation as she presented the Budget 2024-2025 in Parliament on July 23. This is India’s first budget after Prime Minister Narendra Modi won a rare third consecutive term during this year’s national elections. The Union Budget is an annual financial statement outlining planned government spending and expected revenue for a specific year. “I have a few proposals to promote investment and foster employment. First of all, to bolster the Indian start-up ecosystem, boost the entrepreneurial spirit and support innovation, I propose to abolish the so-called angel tax for all classes of investors,” Sitharaman said in her speech. The angel tax treats investments received by startups from external investors as ‘income from other sources’ and levies a 30% taxation on them. Often short of funds, startups tend to lose money as angel tax requires them to share a significant part of the investment towards paying taxes. Technology startups in India have grown significantly to about 31,000 in 2023 from around 2,000 in 2014. According to NASSCOM, a trade association of India’s IT industry, the sector witnessed the creation of about 1000 new tech startups in 2023. The Modi-led government plans to boost employment, upskilling the work force, startups, and small businesses in the current financial year that ends in March 2025, after unemployment emerged as a key voter concern despite India’s strong economic growth. According to the Centre for Monitoring Indian Economy (CMIE), an independent think tank, India’s unemployment rate stood at 9.2% in June 2024, a sharp increase from 7% in May 2024. “India’s startup ecosystem received a big boost in today’s budget as the angel tax is abolished for…
Filed under: News - @ July 24, 2024 10:12 am