Introducing GST will solve issues faced by e-commerce industry

GST

The E-commerce and Start-ups India sector has high expectations from the Union Budget 2016-17 and is looking forward to a clear stand on the laws and regulations in the Online Commerce industry.

The budding E-commerce sector is struggling with old tax laws and regulations both at the central and state level. The E-commerce sector is evolving at a fast pace and new sales models of cash-on-delivery model have been introduced by many e-commerce players to tap the potential customers. This has led to a debate on intra-state sale vs inter-state sales tax laws. We expect the Govt. to simplify tax regime for start-ups to foster innovation and create a conducive ecosystem for entrepreneurs in the country. Those businesses which cater to many states have to deal with laws of different states and E-commerce sector has to typically cater to sale of products in various states. Online companies would look forward to an integrated and uniform approach for tax laws and regulatory policies.

As a startup, we welcome the move by PM Modi to offer 3 years of tax exemption under the Start-Up India action plan; but more than exemption on Income tax, the statutory and regulatory compliances related to various filings like Service Tax returns, MCA filings, TDS returns and various state specific compliances should be simplified as the filing of these documentation consume a lot of time and bogs down a startup. We expect the Govt. to introduce e-commerce and start-ups friendly initiatives that will boost the e-commerce industry.

Exemption of the angel tax (that taxes the capital receipts) will help the start-ups industry, especially when financing from banks and VCs is unavailable. Even the tax rates for the investors should be rationalized, as they also take a risk by investing in startups. Favorable policy regulations like ease of compliance and tax exemptions will boost the sector and contribute to the growth of the economy.

A Dedicated Corpus of Funds announced by the government under Startup India action plan will definitely help entrepreneurs and startups, as many players struggle with funds in the initial stages. However, the budget by the govt. must make sure that the funds are judiciously allocated so that there is uniform distribution across different industry sectors and there is limit on funds allocated to one startup.

The ‘Startup India, Standup India’ campaign has created excitement and raised hopes of the startups. We look forward that the budget will lay down a clear roadmap on the execution of all the policies announced.