India’s burgeoning digital payments industry received a budget lift from Finance Minister Nirmala Sitharaman by way of a INR 1,500 Cr fund earmarked for the growth of the sector and to “incentivise” businesses deploying solutions.
NPCI’s UPI channel has recorded an annual growth rate of 414% since its inception in 2016 with over 200 million active users.
The start-up sector received much-needed encouragement as well
The Finance Minister has extended the tax holiday for start-ups by one more year. According to Union Budget 2021–22, start-ups will get capital gains exemption by one more year to 31 March 2022. Start-ups also have one more year to claim tax holiday.
The government also proposed to incentivise incorporation of one-person companies, a move which will benefit start-ups and innovators. This move will allow such firms “to grow without restriction” on paid-up capital and turnover, allowing conversion into any other type of company at any time, reducing residency limit for an Indian citizen to set up an OPC from 182 days to 120 days, and allow also non-resident Indians to incorporate OPCs in India.
An IT revamp paves the way ahead for a digital future
Indian IT firms stand to gain from the budget proposals of Digital Census 2021 and revamp of Ministry of Corporate Affairs portal MCA 21 3.0. Finance Minister Nirmala Sitharaman said that the government will use data analytics, artificial intelligence, machine learning to launch MCA 21 3.0 which will add the facility of e-scrutiny, e-consultation, compliance management, and e-adjudication among others.
In the budget it is also stated that the next general census in the country will be the first digital.
This will mean a boost in business for both hardware companies, which will likely see a surge in sales of laptops, tablets, smartphones and printers, as well as software companies that will run and build the technology-enabled backend.