Union Budget 2024-25: A Game-Changer for Startups and Investors!

The recently announced Union Budget for 2024-2025 has introduced several measures that are set to impact the startup ecosystem and investor landscape in India. To delve deeper into these changes, we spoke with Mahavir Sharma, a serial entrepreneur, mentor, angel investor, and co-founder of Rajasthan Angel Innovators Network (RAIN), who shared his insights on how these budget announcements will shape the future of startups and investments in the country.

Abolishment of Angel Tax: A Long-Awaited Relief

One of the most significant changes in the budget is the abolishment of the Angel Tax. According to Sharma, this move is a "great move" and a "long pending request" from the angel and VC community. He believes this will benefit many startups by easing the tax burden. However, he expressed a desire for immediate implementation, rather than the proposed start date of April 1, 2025.

"It would have been great if it would have been put in force right away," he remarked.

Foreign Investment Tax Rate Cuts: Leveling the Playing Field

The budget's provision to cut tax rates for foreign companies is expected to have a profound impact on both foreign investments and domestic competition. Sharma highlighted that the startup ecosystem in India has seen more funding from outside the country than from within.

He noted, "The retail investor in India has still not gotten into startup as an asset class."

The tax rate cut, along with the abolishment of the Angel Tax, will likely lead to easier and better funding from multiple sources, creating a level playing field for investors.

STT Increase on Futures and Options: Stabilizing Investor Behavior

Discussing the increase in Securities Transaction Tax (STT) on futures and options, Sharma suggested that this would improve investor behavior by making it more stable and less erratic. He praised the government's gradual improvements in policy and framework, particularly mentioning the opportunities presented by the GIFT City initiative.

"These will create a better environment for investments more than anything else," he stated.

Boost for Space Startups: A Step Towards the Future

The budget has allocated a substantial fund of ₹1000 crore specifically for space startups. Sharma sees this as a highly encouraging move by the government, which is keen on advancing sectors like space tech, defense tech, and drone tech. He emphasized the importance of government support in these areas, noting that the capital required for space ventures is significantly high.

"This 1000 Crore satellite fund will be something that should be a great help to boost the sector," he said, highlighting the long-term benefits of such investments.

Empowering Women: A Path to Economic Growth

Another notable aspect of the budget is its focus on women empowerment and skill development. Sharma believes that increasing the participation of women at all levels of business will significantly boost India's GDP, particularly in the MSME, manufacturing, and service sectors.

"All incentives and all skill upgradation and helping empower women across sectors across stages will be a great move," he affirmed, predicting that these efforts will lead to substantial economic growth in the coming years.

The Union Budget 2024-25 has introduced several key measures that are poised to positively impact the startup ecosystem and investor landscape in India. From the abolishment of the Angel Tax to the focus on women empowerment, these changes reflect a forward-thinking approach by the government, aimed at fostering growth and stability in the country's burgeoning startup sector.