The first budget of the decade was also India’s first paperless budget, with the finance minister
replacing the Swadeshi ‘bahi khata’ with a Made in India tablet. “The preparation of this Budget was undertaken in circumstances like never before,” Sitharaman said at the start of her nearly two-hour budget speech.
One of the biggest winners was the country’s growing digital payments industry, which saw an
allotment of Rs 1,500 crore for a new fund to further accelerate growth and incentivise businesses to offer digital payments.
This comes after the industry saw
significant growth in 2020, as millions of first-time customers and small businesses adopted digital payments amid the pandemic.
Several industry chiefs and experts told ET that the new fund could be the much sought-after “compensation” for the losses incurred by the industry on account of the waiver of Merchant Discount Rates (MDR) on UPI and RuPay that Sitharaman had announced in her first budget in 2019.
Another key proposal is extending
social security benefits to gig and platform workers, which Sitharaman claimed is a global first. The government plans to launch a website that will collect information on gig and construction workers among others, and help formulate health, housing, skill, insurance, credit, and food schemes for them.
To incentivise startups, the government has proposed to
extend the eligibility for claiming tax holidays for startups by a year to March 31, 2022. It has also proposed to extend the capital gains exemption for investment in startups by a year to March 31, 2022, to boost funding to these startups.
In another significant move, the government plans to
increase the foreign direct investment (FDI) limit for the insurance sector from 49% to 74%.
Besides this, Sitharaman said the government plans to
incentivise the incorporation of One Person Companies (OPCs) by allowing them to grow without any restrictions on paid-up capital and turnover, and convert into any other type of company at any time.
Here’s a quick look at the key tech and startup highlights of Budget 2021:
1. Startup funding eased via GIFT City-IFSC route
To help international funds relocate to India and avail tax exemptions, the budget proposed
new tax incentives for units under the International Financial Services Centre, or IFSC, at GIFT City Gandhinagar.
2. Rs 1,500 crore for the digital payments industry
The industry expects a
target-based subsidy for firms deploying acceptance infrastructure in Tier III and beyond. More details are however awaited on how the fund will be operationalised.
3. Tax holiday for one more year
move could provide a much-needed post-pandemic boost to the upstarts.
4. One-person companies will be a thing now
On the cards is a
proposal to reduce the residency limit for an Indian citizen to set up an OPC from 182 days to 120 days and allowing Non-Resident Indians (NRIs) to incorporate OPCs in India.
5. India’s gig workers to get social security
has proposed to launch a portal to collect relevant information on gig workers to help formulate social security schemes for them — and the migrant workers population at large.
6. Indian IT firms set to gain from Digital Census 2021, MCA 21 3.0
The government has
set aside more than Rs 3,000 crore for conducting the Digital Census 2021.
7. Fintech hub in GIFT City
The aim is to “support the development of a
world-class fintech hub” at GIFT City that’s designed to double up as a multi-service finance hub in Gujarat.
8. Here’s how startup founders, tech leaders reacted to Budget 2021
India’s startup founders and tech executives
gave a big thumbs up to Union Budget 2021.