How the budget will impact different sectors
Here’s how the advertising and marketing industry reacted to Union Budget 2021
How the budget will impact different sectors
- Presenting the first paperless
Union budget, Finance Minister Nirmala Sitharaman updated the definition of small business under Small Companies Act, 2013 by raising the capital base to Rs 2 crore from Rs 50 lakh.
- FM also announced the launch of data analytics, AI, ML-driven MCA 3.0 version and an ecourt system as a special framework for MSMEs.
- Industry experts voiced their enthusiasm about the government’s steps towards giving the digital and
startupecosystem a boost.
To mitigate the stress caused by nationwide lockdown in 2020, the government further announced a Rs 3 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for MSMEs under the Aatmanirbhar Bharat Abhiyan.
The budget has laid out a foundation for a future-ready ecosystem and marketers and
Ashish Bhasin, CEO-APAC and Chairman-India, Dentsu
In my opinion, this is a great Budget for the economy as well as for the advertising industry. It is clearly a growth-oriented budget and I am particularly enthused about the investments in Infrastructure and Health. What is also good is that the taxes have not been raised and the process of taxation has been attempted to be simplified. Disinvestments and Borrowings have been proposed as the preferred funding route, rather than increased taxation, which is helpful.
Whenever the economy does well, the advertising industry benefits. Hence, I feel this economic growth that the budget fuels will result in good growth for the advertising industry this year and we should be positive and bullish, both about India’s economic future as well as for the advertising industry.
I also like the thrust towards increased usage of digital, including in governance, starting from the symbolic usage of an India made Tablet to read the budget from, by the Finance Minister.
However, one has to still see the fine print because the important thing is that the ideas presented must result in smooth on-ground implementation, where our track record has not been that great in the past.
Overall I find this a good, growth-oriented budget, with some benefits for almost every section of the economy and hopefully this should bring our GDP growth into double digits making India the world’s fastest-growing economy this year.
Anurag Bansal, Chief Operating Officer & Chief Financial Officer, DDB Mudra Group
The biggest good news coming out from this Union Budget is no negative tax on corporates as well as individuals and no Covid cess. With the big push on infrastructure and healthcare spending, corporates in these sectors stand to gain. Raising resources without increasing taxes, powered by massive borrowings are the key highlights of this Union Budget. It will enable the Government to invest in growth impulses leading to structural changes in the economy. This will help in capital formation in real assets and demand generation. The time limit to reopen tax assessments is reduced to 3 years from 6 years, coupled with ease of tax compliance, which will simplify business challenges.
Overall, Indian economy’s recovery from the impact of Covid-19 has been much better than expected, leading to a spectacular bounce back in consumer sentiments. Advertising and media stand to gain as the economy picks up momentum and clients resume their spends. And with the focus of Budget 2021 on capital expenditure and nation building, it augurs well for consumers, markets and businesses.
Ashwini Deshpande- Founder, Elephant Design
Design in India is fundamental to Make in India as well as Atmanirbhar India. With government putting emphasis on Atmanirbhar Bharat, and also the budgets and schemes announced for improving health & agriculture sectors, it seems like the best time for design and development in India. Many more opportunities will emerge to design original products and services in India for India. It is now up to the corporate leaders to put faith and money into developing indigenous solutions relevant to Indian needs and make them in India. Unless that happens, design consulting & profession will remain marginalized with no specific ministry or Ayog supporting its growth.
Siddharth Devnani, Co-founder, Director, SoCheers
Overall, the correct seeding strategy seems to be in place for a growing economy. I applaud the FM for making progressive moves for the benefit of the overall workforce. There are three points that I believe will have a direct impact on our industry as well.
1- Social security benefits to be extended to gig and platform workers for the first time. Minimum wages will apply to all categories of workers: FM
Customers have been beneficiaries of the digital economy along with the food delivery and app-cab startups and their investors. This move in the budget will ensure the real workforce behind this also benefits from the exponential growth of these industries. Looking forward to the socio-economic mobility of this massive workforce. This will now be at par with the most progressive legislations in the world.
2- Digital census budget allocated Rs 3700 crore
As an advertiser, the data which will be made public after the census would be instrumental in understanding the demographics of the country. The data mining capabilities have evolved manifold since the last census. This has the potential to lead to a lot of new insights.
3 – Tax benefits for startups
The announcements under this sector are promising. Though one will have to wait for the details before making a conclusive opinion about it. But if all of them are implemented, they will definitely be extremely helpful for startups - the future of the country and MSMEs - the backbone of the economy.
Chetan Asher, Co-founder & CEO, Tonic Worldwide
The budget as expected is focused on reviving the economy. Increased spends in infra projects and focus on health, it delivers on both. Focus on promoting digital payments and not losing the momentum will only grow the digital ecosystem. Tax holiday for start ups will give impetus to innovation.
Ashish Hemrajani, Founder & CEO, BookMyShow
We thank the government and the Finance Minister for a forward-looking Budget 2021 that puts the thrust on infrastructure, healthcare and capital expenditure to stimulate growth and accelerate recovery. The Government’s continued impetus to a Digital India by way of support to startups and internet businesses through the ₹1,500 crore fund to boost digital payments is a step in the right direction towards creating value through entrepreneurship for the economy.
Additionally, the Government’s efforts to iron out compliance issues by decreasing the time-limit for re-opening of income tax proceedings to three years from the present six years as also increased threshold for tax audits supported by greater technology deployment to streamline the process is well appreciated. The Government’s commitment to support the common man with no increase in taxes or capital gains tax or levy of COVID cess, is a welcome move.
The entertainment ecosystem, the world over, remains the key stone for travel, tourism and hospitality industries which are growth engines for any economy and have been the worst-hit through the pandemic. Budget 2021 did not address the long-pending relief measures for the media and entertainment industry by way of easing infrastructure roadblocks and rationalizing the extremely high GST rates on live entertainment with that levied on cinema.
While Budget 2021 marks a positive step in the direction of sustained growth, we hope the government will provide some fillip to the entertainment industry that is a significant contributor to the aspiration of a $5 trillion economy, enabling employment opportunities, adding significant heft to the country’s growth.
Kunal Shah, Founder, CRED
India’s first digital budget has introduced provisions, initiatives and programs that address the need of the hour. The initiatives proposed, especially those related to the supporting value creators in India, highlight the optimism in recognizing the changes these entrepreneurs and startups can bring about in the country. This year’s budget has empowered value creators to invest in India’s growth story. Provisions such as allowing the creation of OPC's without restrictions, extending the claim period for a tax holiday for startups and extending the capital gains exemption to encourage investments will help promote the growth of India’s already burgeoning startup ecosystem. Apart from this, reduction in compliance burdens through single registration and licensing, and filing of online returns is also a step in the right direction. Finally, the FM’s speech highlighted the importance of promoting inclusion and participation of all in the workforce. Provisions that will allow women to work in all categories with adequate protections helps recognize their valuable contributions to furthering the growth of our economy.
With regards to fintech, the initiatives to create a fintech hub and an investment of 1500 crores to promote digital mode of payment helps indicate the importance of solutions and innovations in fintech, to help ease payments and incentivize spending and continue our lead and dominance in this space, globally. With these provisions however, there is a need for sustained measures that help increase digital and financial literacy, enabling more individuals to benefit from solutions made available to them. Incentivizing the use of credit and educating Indians about the responsible use of credit through financial education will help promote consumption, contributing to economic growth, which is dependent on personal consumption.
Sandeep Aggarwal, Founder & CEO, Droom
Government extending the life of passenger vehicle and commercial vehicle by 5 years each is a good catalyst for the automobile industry. The vehicle is among the top 3 big-ticket items for any human being and larger economic life for it only means better ROI for the users. This also means the used automobile industry in India will be more robust in decades to come. Government allocation of Rs. 18,000 crores for infrastructure will certainly boost the automobile industry. Also, India adopting global standards for scrapping vehicles will only create a more holistic ecosystem for the industry. No country has ever achieved economic freedom until it has fully democratized transportation and its reach. From the USA to Western Europe and China to Japan all have unleashed their economic growth due to the adaptability towards automobiles and world-class road infrastructure.
Chaitanya Ramalingegowda, Co-founder & Director, Wakefit.co
The Budget 2021 shows promise for startups as well as the gig economy workers. The key to success, we believe, will be in the strength of its implementation. The boost to startup funding due to the extension of capital gain tax exemptions for investors and extension in the tax holiday are certainly encouraging moves, allowing startups to avail the necessary rocket fuel it needs to scale. This will further encourage home gown startups to thrive, especially now when the ecosystem is actively promoting 'Make in India'. For D2C companies with in-house manufacturing, the move to build a portal for gig workers and provide them social security is extremely significant as well, as it will help streamline workforce management across the company and reduce compliance issues for employers. With 22 warehouses and factories across three locations, we are committed to the welfare of our gig workforce and hence, we highly endorse the quick implementation of this move. As a startup entity, it is extremely crucial for us to be provided with such external boosts to fuel our business and create pathways for continued innovation.
Vivek Gupta, Co-Founder, Licious
After the tough global lessons learned in 2020, it’s reassuring to see India’s latest Union Budget highlight the importance of healthcare to build a healthy nation and boost the economy. The focus on the vaccine drive and investment of Rs 64,180 crore over the next six years to improve healthcare services, across primary, secondary and tertiary care facilities, is a welcome step. This will be crucial to strengthen the economy, re-build its broken parts & bring back the much-needed confidence.
Great to see the spirit of entrepreneurship receiving its due attention through incentives provided for One-Person Companies (OPCs). This will go a long way in fostering a culture of innovation. Start-ups, especially the ones who had to face the brunt of the pandemic can use the tax holiday & capital tax exemption provisions. However, this was one of those steps that was expected. The One Nation, One Ration Card is a great initiative. It will solve the migrant workers' crisis & greatly benefit industries, especially MSMEs, that are dependent on these workers for survival & growth.
Heartened to see development proposal for five major fishing hubs, including Chennai, Kochi and Paradip, as sustainable ecosystems for economic activity. Like I said in the past, the fisheries segment earns the country a huge amount of FOREX- a focus on this sector will bear good returns, especially for the fishermen & farmers who are hit badly by the pandemic.
Neelesh Talathi, Chief Financial Officer, Pepperfry
Honourable Finance Minister has unequivocally focused the economic direction of our country to deliver double digit real GDP growth in FY22. The unprecedented allocation at INR 1.18 Lakh crores behind development of road infrastructure has a built in multiplier to boost GDP growth in FY22 & beyond. A strong economy is always built on the shoulders of a strong workforce. This budget seeks to make every Indian Aatma Nirbhar as is reflected in the INR 2.23 Lakh crore allocation to the Healthcare sector. However, the boldest aspect of Union Budget 2021 is the confidence to manage a higher fiscal deficit at 6.8% but not impose any additional taxes on corporates or citizens. The budget has all the ingredients to set India firmly on the path to $5 trillion economy.
Albinder Dhindsa, Co-Founder and CEO, Grofers
We believe that the announcements made in the Union Budget are progressive and provide a clear direction for the recovery of the economy through investments in public health infrastructure. Moreover, the allocation of Rs 15,700 crore for MSMEs will also help our manufacturing partners to scale up their production and support the nation’s vision in becoming Atmanirbhar.
Mohan Lakhamraju, Founder & CEO, Great Learning
We welcome the allocation of Rs 3000 crore towards realignment of the existing scheme of National Apprenticeship Training Scheme in order to provide post-education apprenticeship to engineering graduates and diploma holders. It will help create talent that is employable and equipped with the right set of skills for the industry ensuring professionals are job-ready. The moves to join forces with UAE to benchmark skill qualification and introduction of collaborative training programs with the Japanese workforce are also steps in the right direction. This will help us keep our skilling endeavours in sync with global trends.
Sai Srinivas, Co-founder and CEO, Mobile Premier League
Government’s budget announcement has been extremely encouraging for the start-up ecosystem in India. The extended exemption on capital gains for investments will definitely make more funds available for budding entrepreneurs and growing organizations alike.
Digital payments infrastructure has played a very important role in the growth of the mobile gaming industry. It is very encouraging to see the government’s efforts to strengthen digital payments through incentivization. The Rs 1,500 crore boost will further support migration of more people towards digital payments and will have a positive impact on the mobile skill gaming industry.
The incentivizing of one person companies is especially heartening as it promotes the development of more game creators that will help in strengthening the gaming industry in India. The move has also allowed conversion of one-person companies to any other kind, reducing residency limit from 182 days to 120 days.
India is at the cusp of creating a wave of mobile gaming unicorns, these measures only support that momentum. With these announcements acting as winds in our sails the Indian Gaming Industry can aspire to be the Global Hub of game development.
Kunal Lakhara, VP of Finance and Operations, Pocket Aces
The Union Budget 2021-2022's revised fiscal deficit estimate for FY21 which is pegged at 9.5% of GDP seems promising, and has taken on a realistic approach that is focused on spends which are much needed to revive the economy. The tax holiday given to startups for an additional one year brings relief to enabling the sector to sustain and grow, as we recover from the pandemic. Furthermore, the move to encourage one-person companies without any restrictions is a step in the right direction. This will go a long way in encouraging more people to come forward to set up innovative businesses that solve the challenge of the day, and grow the high-potential startup ecosystem within the country.
Adarsh Kumar, Co-founder, PagarBook
The Honourable Finance Minister included SMEs/MSMEs as one of the sectors of focus. SMEs are the backbone of the country and have been contributing a huge chunk to the national GDP. A good boost has been announced in favour of budding entrepreneurs. Redefining MSMEs and making incorporation of start-ups easier while enabling one-person companies is a positive step to encourage start-ups as it provides tremendous flexibility for entrepreneurs. It is also encouraging to see the government has doubled its allocation towards the MSME sector by setting aside Rs 15,700 crore in FY22.
Kamal Johari - Managing Director, Nobel Hygiene
The tax rate has not been changed, neither has a COVID surcharge been imposed—both of which come as a pleasant surprise and will reflect positively in the stock market movement. The government's decision to focus on infrastructure spending is very good for both overall growth and the economy. We also appreciate the Faceless Income Tax tribunal and the government's step to disinvest from two PSU Banks. In this Annual Budget, the government has also provided Rs15,700crore to the MSME sector—over twice the amount from last year—which we expect will further fuel MSME growth.
Dipali Goenka, Joint MD & CEO, Welspun India Limited
The 2021 budget is encouraging and growth oriented. It supports the achievement of the Aatmanirbhar Bharat vision, and fuels post pandemic recovery. We foresee revival of consumer confidence with the budget impetus on inclusive human capital development, infrastructure development and universal healthcare. Announcement for setting up of 7 textile parks in next 3 years, in addition to the recent PLI scheme for technical textiles and manmade fibers, promises to strengthen the global leadership of Indian Textiles. The budget proves to be a Strong Enabler of Women Empowerment in the country, with the measures announced by Finance Minister that promotes women working in night shifts across all sectors, with adequate safety.
Dinesh Chhabra, CEO, Usha International
We welcome this Budget, India's first post-COVID budget, which is expansionary and focuses on the nation’s growth, bringing a positive sentiment to the overall economy. Strengthening the healthcare facility of the country is the need of the hour and it’s heartening to see the Government’s commitment to the welfare of the society. The Government’s announcement on providing financial incentive to promote digital mode of payment will further boost the ‘Digital Revolution’ in India and is tailored to further accelerate growth rate. Furthermore, the exemption duty on steel and copper scrap, up to March 2022, will also help control the rise in price of consumer goods that will translate into healthy sales in the coming summer season. Giving a boost to agriculture and rural on the one hand and the MSME sector on the other will go a long way in strengthening the India we want to build. We are confident that the budget allocation for FY 2021-22 will provide the much needed thrust to the V-shaped growth trajectory of Indian economy. This budget clearly indicates the Government’s intent on rebuilding a new India.
Vikram Agarwal, Managing Director, Cornitos
The Union Budget 2021-22 is a move towards making India into a digital first nation. It has paved the way for growth mainly in healthcare, infrastructure and agriculture by providing more capital in these sectors.
The enhanced capital expenditure, particularly on infrastructure, will create livelihoods and support announced for the rural economy and farm sector will be a big boost for wealth creation in the non-urban markets. Government has proclaimed to carry forward the Aatmanirbhar Bharat campaign which will boost the confidence of Indian brands like ours. We appreciate the government steps on boosting primary, secondary and tertiary healthcare.
Harshit Jain MD , CEO and Founder, Doceree
This year’s budget by Hon’ble Finance Minister is pragmatic, positive and committed to the healthcare sector which needed a deliberate boost post unprecedented virus outbreak last year. The announcement of centrally funded scheme - Aatmanirbhar Health Yojana - with an outlay of Rs 64,180 crore over six years in addition to National Health Mission is a welcome step towards strengthening primary, secondary and tertiary healthcare in the country. Setting up of 15 Health Emergency Centres shows the government’s intent to be future-ready to address any healthcare crises. It is commendable that the government has put healthcare on the forefront, putting focus on curative and preventive health and wellbeing. The allocation this year is likely to be around Rs 2,23,846 crore which is a whopping over 130% rise from the budget last year. The proposals would make quality healthcare accessible and affordable, besides standardizing healthcare infrastructure across the country.
Prasad Kompalli, Co-Founder & CEO, mfine
Increased investment in healthcare is a welcome news. We really hope it translates into infrastructure and education development, including digital tech in healthcare.
Nupur Khandelwal, Co-founder, Navia Life Care
The budget has surpassed everyone’s expectations with the government’s clear focus on Health and wellness. With a 137% increase in total health outlay from 94k crores to 2.24 lakh crores in this year’s budget, the government has made clear that Health is the main priority. This is definitely a positive and much-needed increase in public expenditure required for ramping up India’s burdened healthcare sector, especially after being exposed during COVID-19. INR 35k crores for the vaccination program will hopefully affirm a ‘V-shaped recovery’ in this Financial year. This will certainly boost the confidence of healthcare workers as well as common people and is a decisive step towards resuming economic activities and tread on the path of growth.
Vibha Padalkar, MD & CEO, HDFC Life
The budget is focused on revival of economic growth and takes cognisance of the need for higher allocation for COVID-19 vaccine development and distribution. The expansionary nature of the budget was the need of the hour and comes along with a roadmap for fiscal consolidation. Higher allocation to capital expenditure should support growth revival and job creation. FDI increase in insurance, continuation of the disinvestment program and ease of tax compliance are welcome steps. All in all, the budget addresses key issues facing the Indian economy and does the balancing act required in these unusual times.
Sampath Reddy, Chief Investment Officer, Bajaj Allianz Life
The budget has been a pragmatic and growth oriented one. It has given greater emphasis to support growth recovery by allowing some fiscal slippage. Fiscal deficit for FY21 has been pegged at 9.5% and for FY22 at 6.8%, which has been higher than market estimates.
Focus areas have been on infrastructure and healthcare sectors --with capex budgeted to grow by a healthy 26% in FY22, and total healthcare & wellness outlay increased by a lofty 137% in FY22. The boost for infrastructure should help to revive investment and help support the growth recovery. With buoyancy in capital markets the government has revived its commitment towards PSU divestment drive by announcing a large target of Rs 1.75 lakh crore via divestment route in FY22, after significantly underachieving the lofty FY21 target on the back of market volatility and economic contraction.
The equity markets have cheered the budget with it being growth oriented, and no major tax changes or levy (expect the introduction of agri & infra cess). However, the bond markets have seen some hardening in yields due to the higher than expected fiscal slippage and government borrowing. The market will soon digest the budget and move on to fundamental factors and global cues. Corporate earnings in Q3 FY21 have been above expectations and is expected to see robust growth of around 30% (for the Nifty index) in FY22. Even though market valuations are elevated, the recovery in corporate earnings and the easy liquidity scenario globally may help to support valuations for some time. Overall, FY22 will be the year of normalization (from the Covid-19 pandemic) and will stage for acceleration in future growth.
Aatur Thakkar, Co-Founder and Director, Alliance Insurance
Increased FDI in the insurance sector will help expand insurance penetration. This was required as insurance businesses require huge capital and deep pockets; and with the increase in FDI limits, additional infusion of capital will enable growth and help insurance reach to the last mile at the grass root level. This one move will help create more jobs for youth which is the need of the hour. We also appreciate the Government’s move to keep control in the hands of Indian residents by announcing that the directors have to be of the Indian origin. Divestment of Government’s share in the one PSU insurance company and announcement of Asset Reconstruction Company and Asset Management Company will help banks tackle bad loans and is a great step for healthy financial system within the county.
Rakesh Goyal, Director, Probus Insurance
The announcement of hiking the permissible FDI limit from 49% to 74% in Insurance Companies and allowing foreign ownership and control with safeguards are the welcome move by the Finance Minister. While increasing the FDI limit was much awaited, but we must get more clarity on revised framework in relation to the control and management of insurance companies. Also, the government’s commitment to come out with the initial public offering (IPO) of LIC will be keenly watched by the country in the next financial year. Government has also proposed to privatize one more general insurance company. All these steps announced by the government will provide capital for growth for the insurers and improve the insurance penetration and financial inclusion in the economy.
The fine print of the budget speech also says that to rationalize taxation of Ulips, it is proposed to allow tax exemption for maturity proceed of the Ulips having annual premium up to Rs 2.5 lakh. Further, in order to provide parity, the nonexempt Ulips shall be provided same concessional capital gains taxation regime as available to the mutual fund. Here we need to wait and see the details and its impact on the life insurance industry.
Praveen Nijhara CEO, Hansa Research Group
The budget gave a strong feeling that the government is very keen on making sure that the rural-urban divide is bridged, and quickly. Rural economy has reported heartening numbers and one believes that India's post-COVID recovery will be triggered from the villages and towns. The budget does well to make sure that the government spends towards making society more equitable. One would have hoped for some relief to income taxpayers keeping in mind the tough year gone by, but I suppose the FM won't hesitate in revisiting that part of the budget if need be.
As a research & insights firm, we are very happy with the Rs.3,768 cr allocation made for the census. The fact that this will be India's first digital census is only the icing on the cake and we very much look forward to seeing it happen.
Dr Arun Singh, Global Chief Economist Dun and Bradstreet
The initiatives for the MSMEs sector proposed during the Union Budget were widely expected. Although there were few direct measures for the sector, there are a couple of initiatives which will indirectly benefit the sector. The Budget has more than doubled the allocation for the MSME sector. To build an Atmanirbhar Bharat, there is a need to strengthen ecosystem, facilitate ease of doing business and increase the manufacturing base. Increasing customs duty on certain products and giving impetus to textiles, auto and steel sector will support the larger number small players in these employment intensive sectors. Increasing the threshold of paid-up capital and turnover for small companies, increasing the turnover threshold levels for mandatory audits, decriminalization of the LLP Act 2008, and relaxations in setting up one person companies will further help MSMEs in doing business. From a funding perspective, a one-year extension of the fund for start-ups was much needed and will support the sector on a larger scale. Second, the scrapping policy would not only the demand for the automobile sector but also make it sustainable. The biggest concern would be when players in the value chain default. Proposal to strengthen the NCLT framework initiative to create a special framework for MSMEs and establishing e-courts given the number of pending cases is expected to uplift the small investor. The other announcements on as road infrastructure, health infrastructure and agriculture infrastructure through its forward and backward linkages, is expected to benefit MSME. So, I think this was a very good budget for the sector.
The BFSI sector had some key announcements this year. The recapitalization of the banks and privatization of PSBs is a good news as NPA is a serious concern in the banking sector owing to the pandemic led slowdown, extension of moratorium and unaccounted bad loan recognition as default norms were being relaxed to cushion the system and moderate default contagion. Secondly, raising some funds from either privatization or IPO channel is the right direction to go. Announcements like increase in FDI limit on insurance, PSB recapitalization and setting up a institute which would absorb the bad loans in the system are much need initiatives. Its implementation should follow well-designed framework to ensure greater benefit to sector.
Amit Ramani, Founder & CEO, Awfis
The Union budget has come as a much needed beacon of hope as it prioritizes rebuilding the economy and placing India on the global map. The focus on boosting Indian businesses, across sectors while also allowing consumers a higher propensity to consume, through various tax initiatives, will further boost cash flow within the economy.
The steps taken by the Hon. Finance Minister in order to boost our start-ups, such as reducing money margin requirement and extension of tax holiday for startups by one more year, coupled with technological implementations, will continue to play a pivotal role in increasing the potential of young enterprises.
These proposals have laid down a clear growth map and will steer the envisioning development of the country. At the back of which the economy will grow manifold.
Vinayak Nath, Founder and CEO, My Place
The budget has some hits and misses for the startup ecosystem. Exemption on capital gains on investments in startups and allowing OPC for NRIs will surely improve investment opportunities and cash liquidity. Tax holiday also comes as a relief to the startups that are striving to survive in these challenging times.
Manas Mehrotra, Founder, 315Work Avenue
The Union Budget 2021 has predominantly focused on revitalizing the rural economy which is a good move and this will act as a boost to the economy and increase demand in tier-2 and tier-3 cities as well. The budget could have had some specific measures for the co-working sector to enable its higher growth. However, the proposal to not have TDS on dividend is welcome. A positive is also dividend on receipt basis rather than advance taxes schedule which will enable shareholders to plan cash flows better. The extension of tax exemption and exemption on capital gains for start-ups by one year will help the start-up sector which will indirectly boost the co-working sector too.
As co-working is playing a vital role in the economic growth of the country, the Government could have recognised it under special schemes like REIT to handhold the industry for better growth. As the industry is going competitive, it would have been good if the rate of TDS on coworking services was reduced. It would have been enabled us to provide real estate solutions to clients at economical rates and helped in better flow of working capital. Apart from these, input tax credit under GST is an important issue that concerns the sector. The government has not enabled co-working firms to claim input credits on work contract and construction services supplied, as detailed under GST provisions. This would have checked the increased outflow of cash that co-working firms are currently experiencing. We were also hoping that input tax credit under GST be extended to developers so that it could be passed on to companies who lease out space and thereby reduce their overall costs. Going forward, a single window approval approach is also required by co-working, instead of having to seek multiple approvals for the same business.
The post lockdown scenario is bringing in a wave of new opportunities for the co-working players as companies seek out alternative options to reduce costs and capital expenditure. As companies look to resume business, redesigning and restructuring of existing real estate will pose yet another challenge, however co-working spaces will be able to respond to design changes required post-COVID-19 quicker and more efficiently than traditional office spaces. Overall, the co-working industry is looking at improvement in the ease of doing business. The government could assist in this a great deal by addressing regulatory concerns and by encouraging more co-working firms to open up through a series of both financial and non-financial incentives.
Nemesisa Ujjain, Director - Innovation Projects, The Circle.Work
The budget announcements prove once again the government's commitment to advancing the mission of #DigitalIndia at an accelerated pace, and the decision of going paperless and using a "Made in India" tab to present the budget highlighted this effectively. Impressive reforms like simplification of GST, incorporation of one-person companies, the extension of Tax Holidays (till 31st March 2022) will provide a boost to startups. This definitely appears to be a startup-friendly budget, with initiatives like the Swasth Bharat Scheme, the setting up of the National Research Foundation, massive infrastructure projects, and incentives to promote digital payments, which would create new opportunities for entrepreneurs in the country.