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Startup, IT Sectors get Major Budgetary Support

The Union and State Government budgets presented in February included many announcements which are favourable to the IT/ITES industry and startup community. Union Finance Minister Nirmala Sitharaman in her Budget 2020-2021 speech addressed the startup ecosystem as the “strength of India”, and “job creators”, and announced a bunch of measures to ensure ease of doing

The Union and State Government budgets presented in February included many announcements which are favourable to the IT/ITES industry and startup community.
Union Finance Minister Nirmala Sitharaman in her Budget 2020-2021 speech addressed the startup ecosystem as the “strength of India”, and “job creators”, and announced a bunch of measures to ensure ease of doing business for Indian startups. We are glad that this budget has included a seed fund to support early-stage startups and an investment clearance and advisory cell for entrepreneurs. Allocation of Rs. 6,000 crore under the Bharat Net Programme with a focus on digital connectivity is an appreciable move.
Some of the key wins include the creation of Deep Tech Fund to support startups in the emerging technologies space where the government has proposed the setting up of a National Mission on Quantum Technologies and Applications with an outlay of Rs. 8000 crore. Another big relief is in the area of taxation of Employees Stock Option Plans (ESOPs). As per the Budget proposal, employees can now defer tax liability for five years or till they leave the company or when they sell their shares, whichever is earlier. The budget has accommodated a long-pending demand on amendment of definition of ‘eligible startup’ under section 80-IAC to increase the turnover limit from Rs. 25 crore to Rs. 100 crore. The proposal for setting up of clusters for designing, fabrication and proof of concept is another great move. The FM’s proposal to formulate a policy for establishing Data Center Parks to enable firms to incorporate data at every stage of their value chains, is a step in the right direction. The proposal to create a digital platform to offer seamless application process for protection of IP is the need of the hour for safeguarding our innovation.
In Kerala, FM Thomas Isaac has also extended more than a helping hand to the startup community. KSUM has been allocated Rs. 73.50 crore for the 2020-21 financial year. The Budget also focuses on helping startups to tide over capital paucity. KFC and KSIDC would offer security-free loans to startups which have secured work order from government/quasi government/major corporates or institutions. Financial assistance up to Rs. 1 cr. will be provided at the time of expansion of new product prototypes that are related to SDG of UN and are also required by any government department. The FM assured the industry that stamp duty rationalization will be included in the Finance Bill.
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