Monday, February 3, 2020

Budget 2020: Positive Reaction from the Startup Industry W.R.T. Deferring ESOPs by 5 Years

With the bold step by the finance minister - Nirmala Sitharaman in Budget 2020, startup fraternity is really happy with regards to the deferring of ESOPs.

“We welcome the specific focus on startups in the budget as the engine of innovation and creativity in the economy. The creation of digital platform for managing and filing of IPRs is something our country needed as the IPR laws are still not very well defined and we welcome this move with full support. One area where we would have liked more focus from the budget was around providing a simple platform for startups to manage their foreign exchange and remittances. The current banking processes around foreign remittances (both incoming and outgoing) are extremely cumbersome and can be made easier for registered startups to enable more focus on innovation and exports rather than dealing with paperwork and regulation. The deferment of ESOP taxes is something that should have been done even earlier as many employees do not cash in or do not sell their ESOPs for a long time hence should they should not be preemptively taxed. Regarding the tax breaks, while a 3 year income tax exemption is a welcome move, this period can be extended to 5 years which would give the startups more time and runway to invest in digital disruption." - Siddharth Goenka, Founder and CEO of Aiosell Technologies

"For Startups, deferring the ESOPs Tax by 5 years and a provision for seed funding is a vital impetus towards boosting the small business sentiment and centrifugal to India's $5 Trillion vision by 2025" - Vikramjit Singh Sahaye, Founder and CEO, Hiring Plug. 

"One of the core reasons behind a successful startup is the ability to hire from a very talented pool and to keep them motivated during the long and hard journey of scaling. This is the reason why startups from hubs like Silicon Valley grow up to become world-renowned and add value to society at large. The tax deferment on ESOPs will prove to be one of the significant factors and levers in motivating growth-enabling employees, a great step in helping startups in India to scale by hiring and retaining them! Reforms like these give more power to the Indian startup hub to make a mark on a global scale and contribute towards India's $5 Trillion vision by 2025." - Vivek Goyal, Co-Founder, PlayShifu

"Deferring the ESOPs in startups by 5 years is a thrust that will surely advance the business sentiment and help reorganize the sector and this is very much centrifugal to India’s $5 Trillion vision by 2025." - Shubhendu Sharma, Founder and COO, Wifi Dabba.

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