Start-up firms seek tax sops

Mumbai: Start-ups and small and medium enterprises (SMEs) which are the new power houses of India’s GDP growth are expecting rationalising of taxes, simplification of the regulatory framework among other reforms to be announced in the Budget, to stem the tide of the start-ups shifting base to Singapore. More than a dozen start-ups like inMobi, AdNear, Bubbly, Viki, Capillary Technologies have moved to Singapore. “Some of this is linked with the start-up ecosystem in Singapore where tax rates are at 17 per cent and a company can be opened in a few hours, whereas it takes on average a month in India,” said Sanjeeva Shivesh, CEO and founder, The Entrepreneurship School which trains people for entrepreneurship and provides incubation.

R. Narayan, founder & CEO of Power2SME goes further and hopes additionally that the government will announce setting up an SME bank as SMEs find it difficult to get bank funding. Small businesses and start-ups have an effective taxation rate of 26.73 per cent while large companies pay an effective tax rate of 20.97 per cent. This is perverse, said Mr Shivesh pointing out that in Singapore start-ups pay zero tax on the first Singapore dollars 100,000 profits, and only 8.5 per cent on the next SGD 200,000 and maximum 17 per cent on profits above SGD 300,000 unlike in India where you pay 30 per cent across all profit slabs, he said. Besides, income-tax exemption on angel fund investments is the much required need of the hour, he said.

SME’s, said Mr Narayan should have the same facilities as BPOs and the government should support the setting up of SMEs in SEZs as their manufacturing capabilities  have a direct bearing on large enterprises.