Neeraj Saxena’s views on the Startup & Corporate budget

Neeraj Saxena is the Managing Director of X scale, a company that invests in Indian B2Bs and helps them scale their business in both Indian and international markets. In this context, he was asked about his thoughts on the recent budget announcements and their impact on the startup ecosystem, particularly with regards to Research and Development (R&D).

Positive aspects:

a. Tax benefits and holidays for companies incorporated as start-ups have been extended to the end of the next financial year.

b. Carry forward of losses for start-ups has been increased to 10 years, which is a more realistic term.

c. India Start-up Seed Fund allocation has increased significantly to promote entrepreneurship in the country.

Missed opportunities: a. Lack of parity between the long-term capital gain tax on start-up investment and listed equity. b. Ambiguity and lack of transparency in the tax treatment of venture capital funds. c. The rules for venture capital funds need to be clearer and in line with international standards to attract more investment.

Overall, Neeraj views the budget as having some positive aspects for the start-up ecosystem, but also mentions some missed opportunities for further improvement.

Saxena begins by highlighting a few positive aspects of the budget for the startup ecosystem. Firstly, companies incorporated as start-ups and granted a startup certificate are exempt from paying income tax or allowed to have a tax holiday for three years, and this date has been extended to the end of the next financial year (March 2024). Secondly, the carry forward of losses for start-ups has been extended from 7 years to 10 years, which is a more realistic term given the typical trajectory of startups. Lastly, the India Startup Seed Fund, which promotes entrepreneurship in the country, has seen a significant increase in allocation (from 100 crore to 283 crores).

However, Saxena also points out some areas that have been missed in the budget. Firstly, there is a lack of parity in the long-term capital gains tax for start-up investments compared to listed equity investments, which he feels should have been addressed. Secondly, there is still ambiguity in the tax treatment of certain components of venture capital funds, such as management fees and carry, which needs to be made more transparent and in line with international standards.

In conclusion, Saxena views the budget as generally positive for the startup ecosystem, but feels that there is room for improvement in addressing the tax treatment of start-up investments and venture capital funds. Watch complete session here : https://youtu.be/Nic8EvponpI