Indore: Traders, common men & start-ups look at budget with lots of hope

Indore: With the stage set for newly-formed Narendra Modi government after its resounding victory in general elections to announce its first Union budget, city traders, salaried employees and start-ups are looking at the impending event with lots of hope and expectations.

Indore being emerging as a hub for start-ups and a “Namkeen” cluster, the trading and business community in Indore too has some expectations from the budget ranging from simplified process for licensing to ‘one shop one GST’ and annulment of Angel Tax levied on start-ups.

Gaurav Garg, Head of Research, CapitalVia Global Research Limited and investment advisor, says that Angel Tax is levied on any private companies that try raising a capital at rates higher than its fair market valuation.

Currently, the rate in India is at flat 30%. The country has emergence of a lot of start-ups and some of which have become shining examples of India’s growth story.

“Now everyone is expecting a lot more start-ups to come up in near future as well. In this budget, the government should look at abolishing this tax for start-ups as it makes raising funds for these companies an expensive affair,” he said.

Angel Tax is being widely seen as a hurdle by all the young entrepreneurs who are aspiring to have a business of their own.

Input Tax Credit

The refund of Input Tax Credit is not coming-reflecting in a timely manner which leads to a huge problem with cash flow mismanagement for start-ups as they have limited working capital.

“In case of co-working spaces, the government should allow the start-ups to claim ITC on work contract and construction supply and that will help to reduce the cost of start-ups to some extent. The corporate tax of 30% should be reduced for start-ups which would give them more space to breathe and survive,” he said.

One shop, one GST

There are more than 4000 Namkeen Factories of various scales present in the city. One of the major problems faced by the Namkeen Shop owners is the complexity involved in the GST.

According to these vendors, they get rebate on only some items of their shop, which makes it difficult for them to understand the whole criteria behind this system. For example, they get rebate on Namkeen items and not on Samosas and Kachoris they sell, which provide a large part of their revenue.

“Namkeen sellers want that in the upcoming budget, GST should be simplified and that they must get rebate on all the products they sell and the system should become simpler so that they can comply with all the provisions,” he added.

Simplified Licensing for Food Factories

Being the favourite place for food lovers, the city is also a hub for food factories. Many small businessmen exit their units because of tight licensing process and GST.

“The sector wants a simplified and easy licensing process to set up food factories so that the industry flourishes and generates employment at the local level,” he said.

Review of Long Term Capital Gain (LTCG)

The government had introduced LTCG tax of 10% last year on the gains from the sale of equity shares held for more than 1 year, if the LTCG exceeds Rs1 lakh in the financial year. The government may consider eliminating the LTCG tax or Securities Transaction Tax (STT) and boost the investors’ sentiments in the equity markets.

Agriculture sector's expectations

PMKSY (Pradhan Mantri Krishi Sinchai Yojana) is expected to be an important announcement to be made in the Union Budget 2019. The ambitious project is aimed at bringing in more land under irrigation following the previous target of bringing in around 32 lakh hectares for FY 2018-19.

The agricultural sector is also expecting higher funds allotment for PMFBY (Pradhan Mantri Fasal Bima Yojana) to considering the massive uptake of the insurance related scheme by farmers in the recent past.

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Free Press Journal