With last year's budget release of Rs 10,500 crores, the expectations of the start-up industry have definitely increased. Programmes like Make in India and Digital India are great initiatives for the technology revolution, but what the IT sector and start-ups in particular are really looking forward to in the upcoming budget is service tax exemption. With an expected increase in the number of start-ups going from 3100 currently (as reported by Nasscom) to 11,500 in the next five years, we expect to attract a lot of angel and institution investments. Hence, unveiling tax reforms will definitely help in facilitating faster growth over a short duration. The new tax reforms are expected to boost revenue and make it easier to do business in India. Adopting policies along the same lines as Singapore's tax regulations will definitely benefit the start-up industry on a large scale.
Impact on employment and sectors
The improvements to the income tax system will also carry major benefits for enterprises and for job creation in the start-up industry. With an expected increase in investments and implementation of tax holiday policies, new start-ups are expected to make higher investments in hiring skilled talent to facilitate faster growth. Also, increasing the basic tax exemption from the current Rs 2.5 lakh limit by 20-30% will help keep the salaried happy.
Most of the IT/ITES and power industries are expected to receive the benefits of the new tax reforms. The new budget is expected to welcome bigger investments for various industries. But the manufacturing industry will attract most of the domestic and international players for investment, considering the growth of our economy on a larger scale.
Change in labour outlook
The new government has definitely realised that we need to scale up our skill development programmes to include the rural population for the nation's overall progress. Hence, launching new programmes like Skill India will definitely help revolutionise India's workforce. The current institutional and educational system focuses less on practical training programmes and more on theoretical knowledge, which makes it more difficult for individuals to find employment opportunities that match their skills. But since most of our industries are struggling to employ skilled labour, they are investing a lot in providing training programmes. By proper budget allocation for education and vocational training, productivity and profitability can be increased tremendously.