As the Lok Sabha election approaches, Congress President Rahul Gandhi seems to have changed his campaign strategy from attacking BJP with lies to making promises. After promising the minimum income guarantee scheme, today the Congress president made some promises for startup businesses. He made 4 specific promises for startups: zero permissions for the first 3 years of any new business, elimination of angel tax, incentives and tax credits based on new jobs created by the business, and easy bank credit.
Want to start a new business? Want to create jobs for India?
Here’s our plan for you:
1. ZERO permissions for the first 3 years of any new business.
2. Goodbye Angel Tax
3. Solid incentives & tax credits based on how many jobs you create.
4. Easy Bank Credit
— Rahul Gandhi (@RahulGandhi) March 28, 2019
This announcement was celebrated by Congress supporters as Rahul Gandhi is promising something which was never available in the country, and hailed it as revolutionary thinking. But if we go into details, it can be seen that what Rahul Gandhi is promising, the Modi government has already delivered.
One of the major initiatives taken by prime minister Narendra Modi was the Startup India initiative, and the promises made be Rahul Gandhi are already covered by this. The Startup India already has provision for Single Window Clearance for starting a business, and it has the facility of self-certification for compliance with various labour and environment laws through a web-based portal and mobile app-based interface.
Under the Startup India scheme, no inspection of is done in the first three years regarding labour laws. Starting a new business just requires registration on a website, it does not need filling up pages of forms and doing the rounds of government offices.
Startup businesses are already exempted from paying tax for 3 years, irrespective of how many people they employ. While Rahul Gandhi proposes to link tax exemption with employment generation. This means, if a Congress party-led government comes to power, they will withdraw the 3-year blanket tax holiday and replace it with a complex incentive and tax credit system linked to the number of jobs created by a startup.
The Startup India initiative also has set up a fund of ₹10,000 crores to support startups which can be tapped by new businesses registered under this scheme as venture capital. The Modi government has also launched a 59-minute loan scheme for MSMEs, where the businesses can obtain approval for loans from ₹10 lakhs to ₹1 crore in just 59 minutes. This loan is provided without any collateral, and the application for the loan is to be submitted online, without visiting any office or bank.
For amounts below ₹10 lakhs, entrepreneurs can avail loan under the Mudra scheme, which also provides loans without any collateral or security. Startups are also guaranteed funds through National Credit Guarantee Trust Company or SIDBI over 4 years.
Rahul Gandhi promises to remove the angel tax, but he fails to mention that it was the UPA government that had introduced it in the first place. The angel tax, which comes under section 56(2)(VIIB) of Income Tax Act, was introduced by the UPA government in the 2012 union budget, but surprisingly media reports slamming it started appearing only after Modi government came to power.
It may be noted that recently the government has relaxed the norms of Angel Tax for startups. It is a mystery that while the same Angel Tax is there since 2012, it became an issue only 2-3 years ago, and Rahul Gandhi promises to remove what was originally introduced by his own government, ostensibly to curb black money.
Not only Modi government is already fulfilling the promises by Rahul Gandhi, but there are also several more benefits under the Startup India initiative. Startup businesses can participate in government tenders without the requirements of prior experience and minimum turnover. Startups are exempted from capital gains tax for a long time, and there is a provision of 80% reduction in patent filing fee for such businesses. Winding up businesses is also made easier, with the provision for closing up a venture in just 90 days.
Therefore, what Rahul Gandhi is promising for new businesses, the Modi government is already providing the same, and much more.