The Indian government is likely to come up with more incentives for budding entrepreneurs in the upcoming budget. This is to create good ecosystem which will be similar to the lines of Singapore, sources say.
Several measures have been suggested to the Finance Ministry in this regard. The suggestions presented by the Commerce and Industry Ministry, includes easy conditions for availing of capital gains tax exemption and reduction in income tax on royalty for technical services.
“DIPP wants to create the best ecosystem for start-ups in the country so that they should not move to Singapore. It has studied several start-up ecosystems of countries, including Israel, the US, the UK, Taiwan, Australia and Germany, but the best one is in Singapore. So, we want to give that type of environment and support to our start-ups,” an official from the Ministry said.
The recently announced action plans for the start-up’s included the exemption of capital gains tax. However, the government asserted that, such exemptions would have to invest capital gains in the Fund of Funds recognised by the government.
“So, we need to ease these conditions in order to promote more and more investments in start-ups. Similarly, there are issues concerning benefits in investments in listed and unlisted start-ups,” the official said,
Experts suggest that India will have to follow the Singapore model to promote the young entrepreneurs and limit the movement of the start-ups from India to the South-East Asian country.
In order to boost the start-up business, Prime Minister Narendra Modi on January 16, unveiled several incentives including tax-holiday and inspector raj-free regime for three years, capital gains tax exemption and Rs 10,000 crore corpus to fund them.
Meanwhile, the government has asserted the need of a self-certification scheme in respect of nine labour and environment laws. Sources said that there will be inspection during the first three years of the launch of the venture as well.
In the last year’s Budget, the government had reduced the rate of income tax on royalty and fees for technical services from 25 per cent to 10 per cent.