Chennai: In a start-up friendly budget, Finance Minister sprang a surprise by announcing a TV channel for the eco-system. The proactive Budget did away with angel tax, opened the doors for category-II Alternative Invest-ment Fund and relaxed norms to carry forward losses as well as that of minimum shareholding.
The Budget proposed to start a television channel within the DD bouquet of channels exclusively for start-ups. "This shall serve as a platform for promoting start-ups, discussing issues affecting their growth, matchmaking with venture capitalists and for funding and tax planning. This channel shall be designed and executed by start-ups themselves,' minister announced.
The channel may take inspiration from reality TV shows like Shark Tank in ABC Television Network and the British programme Dragon's Den, which provide a platform for entrepreneurs to attract venture capital. "This is indeed a good idea and we can learn much from existing formats and replicate for faster execution," said Sonica Aron, Founder and Managing Partner, Marching Sheep.
Budget also provided a solution to the vexed 'angel tax' issue, by proposing that the start-ups and their investors who file requisite declarations and provide information in their returns will not be subjected to any kind of scrutiny in respect of valuations of share premiums. E-verification will resolve the issue of establishing identity of the investor and source of his funds. With this, funds raised by start-ups will not require any kind of scrutiny from the Income Tax Department.
"There is lot of growth capital available in India but innovative ideas from tier-II cities often don't see the light of the day because of lack of angels. Angel network needs to grow out of metros to tier-II cities to make India really a startup economy and such tax reforms will go a long way in doing that," said Vivek Goyal, Co-Founder of PlayShifu.
At present, start-ups are not required to justify fair market value of their shares issued to certain investors including Category-I Alternative Investment Funds (AIF). The budget extended this benefit to Category-II Alternative Investment Funds also, opening up one more source of funding. Valuation of shares issued to these funds shall be beyond the scope of income tax scrutiny.
