What the Budget would Look Like If I were the Finance Minister?

The clear agenda on the mind for this Union Budget would be Prime Minister’s vision of “Digital India” & “Startup India-Standup India”.  Though this will be the 4th budget presentation in a row yet the most important one- as it comes just after the Good & Services tax implementation. As Honorable Prime Minister himself hinted that this budget will be further pushing his reform agenda, there is a lot that ecommerce family as whole can look forward to in this budget:

1) The government last year has done away with the Foreign Investment Promotion Board (FIPB) which has put most the FDI inflows and permissions on the automatic route but the government will soon take a reformist stand on the 100% FDI in multi-brand retail. The government will also focus on the FDI in inventory based ecommerce startups to increase the capital funding in the sector.

2) The FinTec is an important arm of E-commerce sector. With demonetization, we have seen a lot of growth in the digital payments and e-wallet ecosystem. The last budget has provided a lot of structural reforms in the sector but this government believes that it needs to do more to incentivize digital payments to encourage consumers, better digital infrastructure, increase bandwidth & also exempt any kind of transaction fee or service fee for next couple of years.

3) Taxation has been the greatest issue in the E-commerce sector. With the entry of GST, a destination based tax, things has become less complex and a lot of clarification has come on the table but even after GST there are a lot of points untouched that will be done in this budget i.e. tax problems regards to Discounts, vouchers, reverse logistics,COD,e-bill,multi registrations and compliance management. GST on stock transfers is also an area of concern since it has reduced a lot of working capital.

4) For startups and entrepreneurs to grow, the government will do more in order to make capital funds more accessible, seed funding more common, give R&D credit for innovation, reduce logistics cost by reducing GST on Road, Infra and Tyre manufacturing. Also, the government will encourage lending based on the GST data and digital footprints. Anti-profiteering procedures will be more simplified as well in order to provide ease to the e-players and benefit to the consumers.

While this government has done more in the last budget and through GST for the startup sector(it has increased tax holiday from 5 to 7 years and decreased tax from 30% to 25%), it will now focus on the E-commerce sector which is booming in India and going to touch 40 Billion Dollar mark in 2018. At the end I believe until and unless the whole ecommerce sector needs to rally together and indulge in meaningful dialogue with the government in order to push the reform agenda ahead of this government in ecommerce sector specifically.

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Ambud Sharma

Guest Author Ambud Sharma - Founder & CEO at Ligo Group/ Escaro Royale.

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