The abolition of the angel tax in 2024 was a welcome relief for the startups. It came at a time when there were challenges startups were facing due to a dearth of funding. The startups expect much more ease of regulatory hurdles as far as new investments are concerned and they also want simplification of FDI to facilitate startup capital. Besides, there are also expectations that more transparency in compliance is also the need of the hour.
The startups expect more measures such as the extension of tax benefits for startups until March 31, 2025, which has been a significant boost for startups.
Deploying simplified compliance processes and incentives for digital and eco-friendly initiatives is something the stakeholders in the startup field feel will foster growth.
“We urge the government to address the complexity of tax compliance, particularly for SMEs, to ease their operational burden and enable them to thrive in a competitive market. We also hope that the government will prioritise measures that support the startup sector and initiatives to facilitate credit access in the startup sector, including flexible financing options like alternative credit, venture debt, and working capital solutions, which are essential for startups,” remarked Ankur Bansal, Managing Director, BlackSoil.
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This expert also adds that the startup sector expects substantial investments in EV infrastructure, including a robust FAME III initiative and incentives for early-stage EV startups and sustainable technologies.
“Targeted investments in agritech, climate tech, deep tech, and emerging areas like space tech will further support India's sustainable economic transition. The government should implement measures to attract more foreign capital to spur growth in these critical sectors ensuring India remains at the forefront of global innovation and green economy,” added Bansal.
Most of the startup representatives are also hoping that there will be regulatory and taxation policy enhancements in the budget and the abolition of the angel tax in 2024 was a landmark reform, offering much-needed relief to startups during a funding winter.
“For 2025, further steps to simplify FDI and overseas investment rules can accelerate the flow of international capital. Enhanced frameworks that streamline transfer pricing and ease compliance for startups will foster a more business-friendly environment. Additionally, aligning Long-Term Capital Gains (LTCG) tax treatment for unlisted entities with public companies remains a critical step to incentivize investments,” pointed out Khadim Batti, Co-Founder and CEO, Whatfix.
There are expectations that the government should also consider giving tax rebates to startups that are investing in skill-based hiring or upskilling initiatives.
“The focus should also be on promoting startup-specific investment funds or supporting tokenisation models to enhance funding access to early-stage and growth-stage startups. The government may also have the critical task of ensuring data privacy while allowing startups to innovate in creating global models of excellence. Government initiatives in promoting global collaboration will help Indian startups gain recognition and prominence on a global stage" observed Sarvagya Mishra, Co-founder and Director at Superbot.
