India’s Finance Minister Nirmala Sitharaman proposed a handful of benefits for the startup ecosystem and to accelerate the growth of digital services in the annual budget Monday as the South Asian nation looks to revive the economy that plunged into deepest recorded slump amid the coronavirus pandemic.
Sitharaman said the nation has earmarked 1,500 crore Indian rupees ($205.3 million) to incentivize the adoption of digital payments. Paytm, Google Pay, and PhonePe are locked in an intense battle to drive people in India to pay digitally, but the firms have struggled to find a viable business model with their core payments service.
Many firms were hoping that the government will permit them to charge for merchants transactions. No announcement on this front was made today.
The budget also proposed to extend social security benefits to gig workers and platforms and launch a website to help these workers find employment, said Sitharaman. These workers will be protected by minimum wages, she said. Additionally, she said women will be allowed to work in all categories with adequate protection.
The South Asian nation also proposed broadening the definition of small businesses, increasing the threshold for capitalization to 2 crore Indian rupees (about $275,000), up from existing limit of 50 lakh Indian rupees ($68,750). This will allow many more businesses to come under small business umbrella and avail relevant benefits such as some tax concessions.
The budget also proposed incentives for incorporation of one-person companies, a move that Sitharaman said will help companies “grow without restriction on paid up capital and turnover, allowing conversion into any other type of company at any time, reducing the residency limit for an Indian citizen to set up a one-person company from 182 days to 120 days, and allow also non-resident Indians to incorporate one-person companies in India.”
Industry executives in recent weeks said they were hoping that India will further relax angel investment tax in the country and address the digital services tax the country began imposing on foreign firms last year. These matters were not addressed in the new budget.
This is a developing story. Check back later for more information.