New Delhi: Software lobby Nasscom on Wednesday proposed that all start-ups be exempted from direct and indirect taxes to reduce compliance burden and cash outflows. In its pre-budget recommendations submitted to the finance ministry, Nasscom also demanded removal of so-called angel tax levied on capital receipts.
It also recommended allowing companies to carry forward losses even if there is change in ownership structure, if it is for capital infusion in the entity.
“Policy regulations like ease of compliance, reliance on self-certification instead of audits, tax exemptions for startups will allow entrepreneurs to devote their time, energy and resources to build upon their innovative ideas,” said R. Chandrashekhar, president, Nasscom. “With the number of tech start-ups in India growing over 40% over the last year, these startups can potentially develop innovative solutions to address the development needs of the country as startups focus on development solutions for health, infrastructure and energy among others.”
Nasscom also sought steps to increase investments in start-ups.
“Investments in early-stage startups are high-risk and there is a need to rationalise tax rates for investors,” it said. It recommended harmonizing capital gains tax for resident investors with non-resident investors and tax rates for angel investors, allowing proprietary domestic capital to set up a limited liability partnership as an investment vehicle as well as exemption of capital gains tax on income from sale of equity of a start-up if the proceeds are reinvested in securities of new start-ups.