View: Simplifying and rationalising the tax regime

As we come to terms with the insurmountable impact of the COVID-19 pandemic, we have seen how it has reshaped the world economically, socially, geographically and even politically. From learning how to work remotely, adapting to a digital way of life etc., people of India are being pushed to change their habits making the e-commerce eco-system an integral part of an individual’s life. With increased internet and smartphone usage in the urban and rural landscape, growth in the e-commerce space has been exponential. The year 2021 has been a watershed year for the Indian startup ecosystem, both in terms of funding and monetisation through IPOs and acquisitions by strategic players. KPMG’ International’s ‘Venture Pulse report’ clearly indicates India seeing a record finance volume of approx. $33 million in 2021.

The entire e-commerce industry had a lot of expectations from the budget because of the vital part they are playing in supporting the whole economy in terms of employment, foreign direct investment etc. Some of the critical asks of the industry were: (a) reduction in overall compliance burden on account of a wide ambit of TDS and TCS provisions; (b) provisions defining the wide ambit of equalisation levy for e-commerce operators; (c) deferment of point of taxation of stock options for employees of new-age companies; (d) allowing carry forward of business losses for an unlimited period in line with unabsorbed depreciation available to others and on change of control; (e) clarity in the income tax law about the listing of Indian companies on overseas bourses.

There have been multiple references to the startups and e-commerce ecosystem in the budget 2022. Some of the critical areas/references where we believe that the startup ecosystem could have new opportunities are: