Budget will spur job creation, boost investments in startups: Finance minister Nirmala Sitharaman

New Delhi: Finance minister Nirmala Sitharaman on Sunday said the budget proposals will spur job creation, encourage investments in startups, leave more money with the middle class, ease credit flow to small and medium businesses, and keep up the thrust on infrastructure creation to boost economic growth.Speaking at an event in Bengaluru, Sitharaman also said the abolition of the so-called angel tax would help budding entrepreneurs. “Most startups were having this grievance that funding comes to them through venture capital funds, and when we have the angel tax, they are scared to come with the money, and angel tax should be removed,” she said.

Introduced by the UPA government in 2012 and imposed under Section 56 (2) (vii b) of the Income Tax Act, angel tax is typically applied to additional funds raised by startups from angel investors over and above the ‘fair market value’ of the company.

Initially aimed at curbing money laundering through this route, the provision later drew criticism for discouraging startup funding.

Sitharaman also said the budget has incentivised job creation, especially for hiring “first-timers” with the proposed internship scheme and focus on ramping up skilling.The government will also set up a fund to encourage banks – by providing guarantees – to lend to micro, small and medium enterprises (MSMEs) when they are at the initial stages of stress and help keep them going, she said.Various changes in the tax regime proposed in the budget will leave ₹17,500 more in the hands of a salaried employee (in the form of a reduced outgo under the new tax regime), she said.‘All states’ interests kept in mind’
Sitharaman countered the opposition’s narrative that she did not mention the names of all states in her speech, stressing that the budget is for all states. She also rejected the claims that Karnataka has been deprived of its legitimate revenue share by the Centre.

Under the ten years of Prime Minister Narendra Modi (2014-24), the state received as much as ₹2,95,818 crore in central allocations, while it got only ₹81,791 crore during the UPA period (2004-14), she said.

Similarly, grants-in-aid to Karnataka under the Modi regime stood at ₹2,36,955 crore, way above ₹60,779 crore during the UPA regime, she said.

Only ₹835 crore was announced by the UPA-II government (2009-14) for railways in Karnataka, while the latest budget alone has made a provision of ₹7,559 crore, she said.

There is a lot of misinformation being spread by the Karnataka government over central allocation, the finance minister alleged.