The prime focus of government post their earth-shattering win in Lok Sabha elections will be on taking strong measures towards economic growth. Even citizens of this country are looking forward to the budget 2019 India with hopes that their lives will become financially less burdensome. With 'The Day' (July 5) not far, let's sum up budget 2019 expectations of start-ups.
While the first budget by Nirmala Sitharaman is expected to be bold and decisive, business pundits are predicting exciting allowances for micro industries, defence personnel, farmers and start-ups.
In just a few years, India has become the start-up hub with more than 1,200 startups setting up their foundation stone in 2018 itself. This list includes eight unicorns, taking the total number to 7,200 till now, as per NASSCOM report. Start-ups are playing a major role in strengthening the Indian business ecosystem by creating more job opportunities. However, the path for budding entrepreneurs is not smooth with the shortage of funding at the seed stage.
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However, the upcoming budget 2019 expectations in India may play a critical role in making the ever-progressing community of India start-ups happier. We’ve summed up budget 2019 expectations of start-ups/ SMEs/ MSMEs from the government, which is likely to set the ball rolling for the second tenure.
Faster Invoice Processing by Government
Start-ups and MSMEs are often facing cash flow hurdles because of the delayed invoice processing. With limited funds at their disposal, business processes are largely affected in case of delayed payments. The notification number S.O 5622 (E) issued last year has already mandated companies to disclose any MSME payment that is left unattended for 45 days. Now, it’s time to apply this rule even on PSUs and government departments to ensure uninterrupted cash flow for start-ups.
Making GST Payable Upon Payment Realization
Another challenge faced by SMBs is depositing GST on behalf of their customers even when the payment has not been cleared. The start-up community is expecting the government to make GST payable only after the date of payment realization. However, currently it’s applicable from the date of invoice generation.
Creating Seed Startup Fund
As promised by BJP in its election manifesto, the government is likely to provide collateral-free credit up to INR 50 lakh. This new scheme for entrepreneurs will give a major boost to the PM Modi's 'New India' target of 50,000 start-ups by 2024. They also talked about creating the ‘seed startup fund’ of INR 20,000 Cr, and we are hoping this to be announced during the upcoming budget 2019 expectations India session.
Timely Processing of Input Tax Credit Refunds
Startups and MSMEs are also looking forward to updated policies regarding input tax credit refunds. Currently, most of the start-ups are facing cash flow issues because the refunds on input tax credit are not processed on time. If this process gets streamlined, start-ups will be able to sustain for long with managed financial resources.
Increase in the Exemption Limit for MSMEs
MSME sector accounts for more than half of our GDP, still they are not covered under the composition scheme. By increasing the maximum turnover limit for the composition scheme, the government can improve the ease of doing business. Expectations from budget 2019 is high, and this sector is expecting an increase in the basic exemption limit.
Single-Page GST Return for Small Traders
Simplification reforms, which were put on the back burner for long, are likely to be introduced in the upcoming budget 2019 India. Schemes like the single-page return under ‘Sahaj’ and ‘Sugam’ formats are likely to give a major boost to small traders. Under this scheme, small businesses with a turnover of up to Rs 5 crores will have to file GST returns on a quarterly basis. However, earlier this limit was Rs 1.5 crores.
At the same time, the government is quite likely to take up agendas like regularization of GST across different sectors like automobile and real estate. Both these sectors are struggling with the reduced demand. By lowering the GST on automobiles from 28 to 18 percent, Government can provide the much-needed boost to this sector.
To reduce the production cost of production in manufacturing industry, steps like bringing manufacturing goods and electricity under the GST purview would be a welcome move.
The countdown to the budget 2019 India day has already begun. Let’s root for major start-up reforms and keep your budget 2019 expectations high!