DECEMBER 20189the budget speech and they would by and largely be neutral or disappointed. One such sector that stands to be disappointed or at best neutral would be the "start up" ecosystem. Angel Tax The biggest issue with the start-up ecosystem was push-ing for a resolution to, was, the scrapping of the Angel tax. Unfortunately, there was no resolution proposed. This means that the start-ups will continue to bear with the brunt of the taxes on the value they receive higher than the perceived FMV. The bigger issue lies in the im-plementation of the angel tax ­ even if individual angel investors, corporates family offices invest at the same price per share as the regulated Venture capital funds or FDI investors, the quantum invested by the former category is deemed to the taxable whilst the quantum invested by VCFs and FDI investors is deemed to be ex-empt. This even though there may be a valuation certif-icate from a Chartered Accountant that the FMV is what the investors have contributed. It doesn't recognise the fundamental fact that each investor has the same set of obligations to an investment including price of the investment and if VCFs / FDI is coming in at Rs. X per share, others have also to commit at same price. So this is clearly a big bummer so far as the start-up ecosystem is concerned. Framework for Early Stage Ecosystem On the other hand, the FM also announced that they are looking at a framework or measures for early stage inves-tors and funds. Hopefully they could come up with anin-dependent body equivalent to foster the development of this sector. This can be a huge step to guide this sunrise sector in the right direction. The only `wait and watch' factor here is going to be how the government manag-es to get this implemented. The start-up India program was a huge step in the direction and most experts would agree that the benefits that program served were pos-itive to start with and very helpful. There was also so much more that could have been done for the ecosys-tem which hopefully the government should address as a part of this framework. Besides, the FM also spoke about permitting the use of hybrid investment instruments for start ups and venture capital funds. This possibly means that the FEMA regulations around this would be tweaked which is a positive step and a welcome move. CryptocurrenciesThere was a mention in the speech by FM that Bitcoin-setc would not count as legal tender. Whilst this is not so good news for participants in the space, the silver lining in the cloud is that the government recognised that there are meaningful and positive uses of blockchain as a tech-nology. Wishful thinking for now for sure ­ may be post suitable application of blockchain and realised benefits, the government may consider collaborating with RBI and launching its own bitcoin/currency. As mentioned, wish-ful thinking for now!!Other DevelopmentsThere are few other areas that are going to be very valu-able to note and explore the early stage ecosystem:1. Rollout of 5G technology and also fostering of manufacturing 5G devices in India. Higher speeds and efficiency in the E-Infrastructure of the country will certainly benefit lot of technology players and start ups alike. 2. There will be a tax deduction for expenses incurred towards new additions to the work force by companies even if the thresholds of 240 days minimum working are not met. 3. Host of indirect benefits that would come to this space will be due to increased thrust on the ambitious healthcare project, skills development focus over last few years, MSME sector benefits, reduced tax rate benefits at 25% to a wider range of companies, allocation of funds to AI, Big Data and IOT and increasing WIFI spots in the country. The fact that the government has moved systemati-cally to have tracking systems for funds and subsidies to the end user, thrust on E-infra, they are in good shape to ensure that the benefits of these are drawn over the medium term. All in all ­ something to look forward to from a policy and hope angle with lots more that could have been done tangibly at an implementation level. The fact that the government has moved systematically to have tracking systems for funds and subsidies to the end user, thrust on E-infra, they are in good shape to ensure that the benefits of these are drawn over the medium term
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