The 2023-24 budget has several important initiatives for the startup and business ecosystem that will encourage e-commerce players to work towards technology driven and digitally backed solutions. A slew of measures have been stated by the finance minister to facilitate the ease of doing business.
Here’s a look at the key announcements that are relevant to startups as well as small and medium enterprises.
What does Budget 2023-24 Offer Businesses?
1. Income tax benefit
Finance Minister Nirmala Sitharaman proposed the easing of norms for startups by extending the benefit of carrying forward of losses from 7 years of incorporation to 10 years.
The incorporation date of startups has also been increased by a year to March 31, 2024 for income tax benefits.
2. AI centres of excellence
The establishment of three centres of excellence for Artificial Intelligence have been announced in the budget. They will be set up in top educational institutions with the aim of realising ‘Make AI in India’ and to ‘Make AI work for India.’
“Leading industry players will partner in conducting interdisciplinary research and develop cutting-edge applications and scalable problem solutions in areas of agriculture, health, and sustainable cities. This will galvanise an effective ecosystem and nurture quality human resources in the field.”
– Nirmala Sitharaman
3. Applications with 5G services
The government has proposed the setting up of 100 labs across various engineering institutes in the country to develop applications using 5G services.
The labs are expected to cover applications such as precision farming, smart classrooms, intelligent transport systems, healthcare, etc, giving way to new opportunities and business models.
4. Accelerator fund for agriculture startups
To encourage agriculture startups by young entrepreneurs, the finance minister has announced the setting up of an Agriculture Accelerator Fund It will aim at creating innovative and affordable solutions and introduce modern technologies to transform agricultural practices.
The digital infrastructure for agriculture will be created as an open-standard, open-source and interoperable platform.
“This will enable inclusive, farmer-centric solutions through relevant information services for crop planning and health, improved access to farm inputs, credit, and insurance, help for crop estimation, market intelligence, and support for growth of agri-tech industry and start-ups.”
– Nirmala Sitharaman
5. Credit Guarantee Scheme
Sitharaman has announced the revamping of the credit guarantee scheme for the MSME sector and allotted a capital of Rs 9000 crores towards it. This will enable MSMEs with an additional Rs 2 lakh crore in collateral-free finance.
“In cases of failure by MSMEs to execute contracts during the Covid period, 95 per cent of the forfeited amount relating to bid or performance security, will be returned to them by government and government undertakings. This will provide relief to MSMEs.”
– Nirmala Sitharaman
Additionally, the Pradhan Mantri Vishwakarma Kaushal Samman (PM-VIKAS) scheme will offer assistance to the country’s craftsmen and artisans who will be integrated into the MSME value chain.
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6. Presumptive taxation eligibility
Finance minister Nirmala Sitharaman has enhanced the turnover limits for presumptive taxation eligibility. Micro enterprises with a turnover up to Rs 3 crore and certain professionals with a turnover up to Rs 75 lakh are now qualified to be taxed presumptively provided the cash receipts are less than 5 percent of total receipts.
Under presumptive taxation, small businesses and professionals need not maintain books of account and get the accounts audited, offering them relief from the tax filing exercises.
7. DigiLocker
An Entity DigiLocker will be set up for use by MSMEs, large businesses as well as charitable trusts. This will help securely store and easily share documents online with various authorities, regulators, banks and other business entities.
8. PAN as a common Identifier
For those business establishments required to have a Permanent Account Number (PAN), the PAN will be used as the common identifier for all digital systems of specified government agencies enabling ease of doing business.
9. Unified Filing Process
To eliminate the need for separate and multiple submissions of the same information to various government agencies, a system of Unified Filing Process will be established. The filing of information on a common portal, will be shared with other agencies depending on the filer’s choice.
10. KYC simplification
The Know Your Customer (KYC) process will be simplified by taking on a ‘risk-based’ instead of ‘one size fits all’ approach. The regulators in the financial sector will also be encouraged to have a KYC system that can meet the needs of Digital India.
11. Data Processing Centre
A Central Data Processing Centre will be set up ensuring faster responses to companies through the centralised handling of the various forms filed with field offices under the Companies Act.
Interesting Read: Budget 2023-24: 10 Key Areas the Government has Focussed on
How will the budget announcements impact businesses?
The budget underlines the government’s ambition to incorporate technology and digitisation in as many areas as possible. As mentioned in the article earlier, several initiatives talk about the strategic use of tech in ensuring growth and development.
For businesses this would result in increased efficiency, accelerated growth and an opportunity to transition into digitally powered enterprises. Interoperable digital identification and unified filing will result in convenience as well as reduced costs. Additionally, the relief offered to MSMEs will boost the sector further which will in turn have a constructive impact on the economy.
Here’s how industry leaders across industries have reacted to the budget.
