Finance Minister Nirmala Sitharaman presented Union Budget for 2020-21 in the Parliament on Saturday, 1st February 2020. Here is how Business Leaders, Startups and prominent HR personalities responded to it.
Key Budget Highlights & Takeaways
- No income tax up to 5 lakhs
- FY21 fiscal deficit target pegged at 3.5% of GDP
- The nominal GDP growth for 2020-21 estimated at 10%
- Benefits for buyers and makers of affordable housing
- Govt to raise funds via a listing of LIC
- Big jump in Bank Deposit Insurance Cover to Rs 5 lakh from the current Rs 1 lakh
- 100 new airports, 5 new smart cities, 10,000-Km gas grid
- To launch a new direct tax dispute settlement scheme
- The tax burden on employees due to tax on ESOPs to be deferred by five years or till they leave the company or when they sell, whichever is earliest.
- Start-ups with turnover up to Rs. 100 crore to enjoy a 100% deduction for 3 consecutive assessment years out of 10 years.
- and, etc..
Reactions
Pankit Desai, Co-founder CEO, Sequretek – The Budget every year rides on massive expectations from the salaried class, corporates, MSME and startups. For the last few years, startups, tech, VC investments, govt aided funding started finding regular mentions but fund allocation to these areas were never eye-popping. But FM gave us a pleasant surprise by announcing Rs 8,000 crore on National Mission on Quantum Technologies and Applications. For companies like ours in cybersecurity space, it is a good move if it becomes a model for creating a replicable cyber forensics setup. Today each state has its own setup and there are some universities that have build out capabilities, but there is no standardization. With increased cyberattacks, the need for a national capability to identify the perpetrators and supporting law enforcement would be welcome. The devil lies in detail, though, so we will need to understand these initiatives once the fine print is available. Having said that, Startups are finding quite a bit of mention in the budget, making them a key part of the growth strategy. We are happy to see that the representations done by the startup ecosystem seem to have found resonance in the budget.
Chaitanya Peddi, Co-founder, Darwinbox- The new tax administrative policy from Financial Year (‘FY’) 2020-21 saw several changes to the personal tax regime that provide transparency and accountability to taxpayers. While these changes will reduce the compliance and administrative burden of both taxpayers and tax authorities, the government and organizations will need to gear up, in order to ensure their employees can best leverage these benefits. The Budget 2020 included the proposed introduction of an e-appeal scheme supported by digital technology, wherein an appellate system with dynamic jurisdiction will be established with one or more officers adjudicating the appeal with no personal contact with the taxpayer.
Moreover, there is also a proposed introduction of a form capable of reporting annual financial details such as purchase or sale of immovable property, share transactions, etc., along with tax paid/collected and deducted details, which can be used to file tax returns by the taxpayers. While in principle all these efforts by the government have given employees several options to choose from, while structuring their taxes, it is also important that employers enable this seamless experience for the employees with the help of new-age technology and platforms.
Kamal Dutta, MD India, Skillsoft– The announcement of developing data Centre parks for AI, IoT, Analytics throughout the country comes as a breath of fresh air. There is no doubt that the skill-sets do not match the standards and the lack of skills is evident especially when it comes to the new-age technologies. The FM talking about bringing the much-needed policy shows how important such skills and technologies are for key growth sectors like IT, BFSI and the economy as a whole. With this initiative, we should positively witness young talent and professionals proactively enhance their tech skills especially in machine learning, artificial intelligence, data analytics, and cloud computing. Rs. 3000 crores for skill development is a good start but lacks support in the form of incentivizing companies investing in the reskilling, upskilling of their workforce for the digital age. With such reforms, the ultimate benefit will be to the young and growing Indian population to secure respectable jobs, strengthen their career path and continuously keep learning to stay updated and ahead of the curve.
Pravin Agarwala, Co-founder & CEO, Betterplace– Good move in terms of taxation on startups. All startups are looking at the road towards profitability and deploying that back into the company to expand thereby increasing employment. Increasing the revenue limit to Rs 100 crore and duration to 10 years, a great move forward. The other key aspect is ESOPs. Employees who come on board with ESOPs and build a company along with the founders. It has been a long-standing demand to tax them only at the realization of ESOPs. The proposed deferred payment of 5 years in tax liability will ensure people get what they deserve and also encash at the first potential opportunity. This would excite them to be part of startups and increase the importance of ESOPs. This would also encourage more employees to participate in the program. Moreover, this would also help more liquidity in the market as the transactions would take place. A win-win for startups and its team. Jobs generation across the spectrum was also a key point in the Budget speech.
There is a need to generate both blue and white-collar jobs for the Country’s youth. While on one hand setting up of online degree courses and internships would give a boost to the education sector, we believe that the infrastructure sector which is set to see massive govt-funded projects being rolled out would generate jobs for grey and blue-collar workers. We work closely with the National Skill Development agency and would be awaiting keenly for a detailed plan to employ youth in construction, operation, and maintenance of infrastructure being built in the Country. Furthermore, we find the proposal to design bridge courses for nurses, caregivers and paramedical staff for postings abroad quite promising for the semi-skilled sector. The Ministry should take a leaf out of this and see if the same can also be implemented in India as we see demand for such roles also growing rapidly in the domestic market too.
Kalpit Jain, Group CEO, Netcore Solutions– The Budget 2020 was expected to perform a balancing act between the agriculture, manufacturing and technology sector — the key drivers of the economy. We believe FM did justice to all 3 by announcing forward-looking programs and initiatives. For a global technology player like us, setting up of data parks in India is a welcome move as this will ensure enhanced data safety because servers and allied infrastructure is likely to be hosted in India, globally benchmarked practices of data encryption will ensure that customers’ data is not misused or profited from as the momentum around Data Protection Law gathers steam. This may just be a precursor to that. While we wait for the finer print, programs like Knowledge Clusters should help younger tech companies in securing their IP and safeguarding their core product codes. It will also motivate them to apply AI, ML and deep tech for more refined solutions to existing problems in the Country.
Kavita Mehta, Founder & CEO, Caymus Tech Ventures- The Union Budget 2020 has allocated over Rs One lakh crore for education and skills up-gradation in India. That the focus on education and skills was well rounded and didn’t seek to push one or two top verticals like technology and management streams were especially promising. The FM focused on providing access to education for people from underserved and poor sections, making technology and digital formats the delivery mechanisms. Further, in order to open up employment opportunities the creation of initiatives such as one-year-long internships and apprenticeships for. Clearly, the idea is to use technology to reach more young people, provide access to education, and empower them to land in-demand jobs.
It is encouraging to see announcements like New Education Policy, financing the education system to attract top talent, online degree courses, bridge courses for support staff, and making India a global education hub. The Government recognizes the urgency with which the world’s largest working-age population needs to upskill in order to have a positive impact on society and the economy. FM’s repeated emphasis to deliver education through portals, designing of new courses and providing viability gap funding for colleges and State Government, will help meet aspirations of young Indians who are comfortable using technology to educate and upskill themselves.
