Budget 2019 Should Have Ticked More Boxes

Nirmala Sitharaman's promise to build the next generation technological pool, assuring investment in AI, Blockchain and 5G skilled manpower is a welcome move

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My publication last week spelt high hopes from the budget. It didn't, however, raise critics' eyebrows when it finally came out last Friday. A mixed version was likely on the cards and there wasn't much deviation from it either.


Not that the Budget delivered on all areas however it reasonably scored on the IT sentiment and expectations of start-ups to a degree.

The big respite came in the form of scrutiny withdrawals on Angel tax for start-ups, a move which will encourage them to function with added liberty.

Besides Angel Tax, some of these announcements particularly looked good -

  • The government's decision to relax the eligibility criteria for the sale of residential property to reinvest in start-up ventures would help. More start-ups stand eligible to long term capital gains now. Though this is largely away from direct incentives for start-ups certainly promises the prospect of added capital in their hand.

  • Nirmala Sitharaman's promise to build the next generation technological pool, assuring investment in AI, Blockchain and 5G skilled manpower is a welcome move. AI hubs and a centre for AI intelligence, though didn't get a mention, will be commenced down the course I'm sure.

With the IT sector long struggling to source skilled manpower, the movie is expected to ease our situation at the HR level. Availability of smart workforce will also reflect in service delivery for start-ups which in turn will promise business stability.

  • Start-ups had expected the government to increase the threshold of section 94B from 10 million to 50 million. The Central Board of Direct Taxes assured of expediting pending evaluations and addressing grievances faster on the other hand. Nothing came out on section 35(2AB) though.

  • Start-ups now are allowed to carry forward losses where they possess 51% shareholding. Tax audits will be conducted online and won't require physical presence anymore. Not only we should expect this to oust tax hassles but start-ups will get down to work in no time.

  • Exemption from minimum alternate tax still remains on the start-up wishlist, however, section 56(2)(viib) has been revised, excluding Category-II altern, active investment funds.

  • Basic duty on capital goods used for manufacturing IT and mobile devices was reduced. This will result in lowering capital cost by roughly 7%. With this, the government intends to bring about the much-needed push to campaigns like "Make in India'. This was understandably expected of the budget.

  • The budget, however, levied duty on other goods that aid the manufacturing of CDs, DVDs, CRT monitors and TVs. While the electronics sector may feel the itch of increased burden, IT companies won't be impacted much, since most hardware units invest little in memory devices and CRT monitors today.

All in all, the budget was quite predictable. Sitharaman was not expected to go full out blazing resorting to every single point on the start-up wishlist.

The points that have been addressed certainly look bright on the budgetary note. A couple of additional waivers and initiatives would have been a bonus though.

For example, the lack of support from the government that keep young start-ups away from taking up public projects and high-level national assignments was much desired.

The Modi government clearly doesn't want to lose focus in favour of public welfare. This is one area where it distinguishes itself from the past UPA regime.

Streamlining policies, stronger enforcement of taxes and better regulation seem to be the need of the hour, which is exactly where this budget aims to deliver on.

Even though the Indian economy is tottering on the brink of financial slowdown however it will not take years before it starts looking back & agile again.

Hope this budget brings in sustained transformation at most industrial levels in the years to come.