CHENNAI: With Budget 2017 coming in the backdrop of demonetisation, every sector expects Finance Minister Arun Jaitley to announce some incentives. E-commerce players don’t expect any doles for the sector, but they want the government to go ahead full steam with the digitisation move.
Stakeholders also expect the finance minister to spell out clearly the guidelines for e-commerce firms, which are currently operating in a policy vacuum.
“Till November 2016, we were seeing a consistent positive sentiment across the country and a resultant increase in discretionary spends. After demonetisation, there is an overall tendency to hold on to cash. We expect the Budget to give some relief to individual taxpayers, increase consumer confidence and restart the consumer spending spree,” said Prabhakar Sunder, chief financial officer, Voonik, an online marketplace operating in products for women’s fashion.
Ajith Mohan Karimpana, CEO and founder, Furlenco, said ‘angel tax’ on start-ups should go. Currently, when angel investors infuse funds into start-ups, including e-commerce ventures, the recipient companies are taxed as the government treats such investments as revenue. Under Section 56 (2) of the Income Tax Act, capital raised by an unlisted company from any individual against issue of shares in excess of the fair market value is taxable as ‘income from other sources’.
Many e-commerce players also anticipate receiving some more clarity on foreign direct investments (FDI) in business-to-commerce e-commerce through the automatic route.
“Since there are a lot of chances of investments moving back to the US, there is a need to push investments in India as well to promote Startup India and Make in India. A favourable change in FDI policies is expected. The last Budget saw relaxed norms on international brands and it is expected that this Budget would relax it further to let brands create their own brick-and-mortar stores with 100 per cent FDI holding,” said Harsh Shah, co-founder, Fynd.
According to Shah, there have been instances of misuse of FDI guidelines by e-commerce companies. So, the government is likely to release more stringent norms.This would, in turn, help small e-commerce players to be back in the game and make the battleground a fair one, added Shah.