UNION BUDGET 2022: A BUDGET OF AND FOR START-UPS

HIGHLIGHTS OF THE FINANCE BILL 2022


Start-Ups


1.Tax Incentives for Start-ups Increased by One Year: Eligible start-ups established before 31.03.2022 had been provided a tax incentive for 3 consecutive years out of 10 years from incorporation. Due to the Covid pandemic, the period of incorporation of the eligible start-up has been proposed to be extended by 1 more year, i.e., up to 31.03.2023 for providing such tax incentive.

2.Concessional Corporate Tax: Concessional Tax regime of 15% was introduced by the government for newly incorporated domestic manufacturing companies. It has now been proposed to extend the last date for commencement of manufacturing or production by 1 one year i.e. till 31 March 2024 from the erstwhile date which was 31 March 2023.

3. Drone Shakti: Start-ups will be promoted to facilitate Drone Shakti through varied applications and for drone as a service. Required courses will be started in select ITIs for skilling in this sector.

4. Fund of Funds: For encouraging sunrise sectors such as climate action, deep-tech, digital economy, pharma and agri-tech based start-ups, the government will promote thematic funds for blended finance wherein the government share will be limited to 20% and the funds will be managed by private fund managers.

5. Defence R&D: In order to boost R&D in defence sector, R&D in defence will be opened for industry, startups and academia with 25 per cent of defence R&D budget earmarked. Private industries will be encouraged to take up design and development of military platforms and equipment in collaboration with DRDO and other organizations through SPV Model. An independent nodal umbrella body is proposed to be set up for meeting wide ranging testing and certification requirements.

6. Financing for agriculture-based start-ups: A new fund raised under the co-investment model facilitated through NABARD will be used to finance start-ups for agriculture and rural enterprise. The scope for the start-ups receiving fund shall focus inter-alia on support for FPOs, machinery for farmers on rental basis at farm level and technology.


Corporate matters


Amendments in Insolvency & Bankruptcy Code: It has been proposed that certain amendments will be brought in the Insolvency & Bankruptcy Code to enhance the efficacy of the resolution process and facilitate cross border insolvency resolution .


Banking and Financials

1. Inclusion of Post offices in Banking System: It has been proposed that 100% post offices functioning in India i.e., 1.5 lakh post offices, will now come under the core banking system which will result in enabling direct and more active financial inclusions and other prominent banking facilities such as:

i. access to accounts through net banking

ii. mobile banking services

iii. ATM services

iv. online transfer of funds between post office accounts and bank accounts.

Farmers and senior citizens of rural areas are likely to benefit more from this proposal.

2. Digital Banking: To ensure that the benefits of digital banking reach throughout the country in a consumer-friendly manner, it has been proposed to set up 75 Digital Banking Units (DBUs) in 75 districts of the country by Scheduled Commercial Banks.

3. Digital Rupee: It has been proposed to introduce Digital Rupee using blockchain and other technologies and the same will be issued by RBI starting 2022-23.


MSMEs


1. MSMEs Portal: It has been proposed that the following portals, (i) Udyam, (ii) e-Shram, (iii) NCS and (iv) ASEEM will be interlinked, for the purpose of performing as portals with live, organic databases, providing G2C, B2C and B2B services. These portals will offer services related to credit facilitation, skilling, and recruitment with an aim to further formalise the economy and enhance entrepreneurial opportunities within the country.

2. Emergency Credit Line Guarantee Scheme (ECLGS): ECLGS has been extended till March 2023 and its guarantee cover will be expanded by Rs. 50,000 crores to a total cover of Rs. 5 lakh crores, with the additional amount being earmarked primarily focusing on the hospitality and related enterprises.

3. Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE): CGTMSE scheme will be revamped with an additional credit of Rs. 2 lakh crores for Micro and Small Enterprises and with an objective to expand employment opportunities.

4. RAMP: To help the MSME sector become more resilient, competitive and efficient, Raising and Accelerating MSME Performance (RAMP) programme with outlay of Rs. 6,000 crore will be rolled out over 5 years.


Infrastructure


1. Road transport: The National Highways network will be expanded by 25,000 km in 2022-23. Rs. 20,000 crores will be mobilized through innovative ways of financing to complement the public resources.

2. Multimodal Logistics Parks: Contracts for implementation of Multimodal Logistics Parks at four locations through PPP mode will be awarded in 2022-23.

3. Railways: Railways will develop new products and efficient logistics services for small farmers and Small and Medium Enterprises. ‘One Station-One Product’ concept will be popularized to help local businesses & supply chains.

8 views0 comments

Recent Posts

See All

CXO Outlook published my piece on the trends for India in private equity investing in 2022. Read the full article below: The deal outlook for India in 2022 is as unrelenting as last year, but reasons