Ramesh Bafna, CFO of Zepto, expects the upcoming budget to introduce some key measures benefiting India’s startup sector. His expectations include tax neutrality for migrating shareholding (‘Reverse Flip’), easing ESOP vesting post-flip, harmonizing capital gains tax rates, and extending loss carry-forward periods.
Bafna also proposes reforms aimed to streamline GST registration via a Tatkal system and resolve working capital issues by unblocking ITC and enabling cross-utilization of credits. “We expect the upcoming budget to introduce crucial measures to uplift the startup segment in India. The tax neutrality on shareholding migration (Reverse Flip) will empower startups, boosting investment and economic growth.”
He adds: “Relaxing vesting periods for ESOPs post-flip and harmonizing capital gains tax rates will ease operations. The proposed Tatkal system for GST registration will speed up approvals, facilitating faster expansion. Easing GST registration compliance through a proposed Tatkal system will address lengthy wait times for approvals, allowing for faster expansion. Moreover, unblocking accumulated ITC, a significant working capital bottleneck, through proposals like selling ITC as tradable scrips, providing refunds for a stipulated period, and permitting cross-utilisation of CGST and IGST credits across group GST registrations, will enable effective use of funds for business operations.”
Introducing these reforms, Bafna believes will foster innovation and create a conducive environment for startup growth in India.
