Support for e-commerce, space economy – Budget 2024 news

The reduction in tax deducted at source (TDS) for e-commerce operators from 1% to 0.1% will make life easier for sellers on platforms like Flipkart, Amazon and Swiggy by reducing their working capital requirements. Moreover, the industry has welcomed the Rs 1,000 crore venture capital fund for the space economy and plans to digitise agriculture. The government’s decision to reduce the corporate tax rate for foreign companies to 35% could benefit companies that have both business and the Global Capability Centre (GCC).

Vinod Kumar, Founder, India The SME Forum said that 1% TDS on gross sales in e-commerce is a major pain, especially for smaller sellers operating with limited working capital. “In a competitive environment, margins for small sellers are typically around 5-6%, so 1% TDS can reduce profits by up to 20%,” it said.

Meesho CFO Dhiresh Bansal said the lower TDS will boost liquidity and improve working capital efficiency, creating greater parity between online and offline retail. A Swiggy spokesperson said it will help the ecosystem, especially small and medium restaurants, manage cash flow issues better.

Rs 1,000 crore venture capital fund for space economyexperts say it has the potential to catalyze startups. Arpan Sahoo, co-founder of KaleidEO, said it “addresses a key funding gap in emerging space research and development.”

Highlighting the signalling effect, Tushar Jadhav of Manastu Space said he sees a “cumulative effect of around Rs 3,000-5,000 crore” in private investment.

However, Rohan Ganapathy of Bellatrix Aerospace, a company that creates spacecraft propulsion systems, said the amount is “only enough to support early-stage startups.”

Anirudh Sharma, a space specialist at Digantara, emphasised that the government needs to act as a “primary customer”.

Pareekh Jain, CEO of EIIRTrends, said the tax cut to 35% could encourage more foreign companies to set up GCCs in the country. GCCs typically deal with transfer pricing and are subject to different tax rules. Hence, the impact of the tax rate cut on them is nuanced. However, companies that have both GCC and Indian business entities are likely to benefit significantly.

The government plans to develop a Digital Public Infrastructure (DPI) that will integrate 60 million farmers and their land into a comprehensive digital registry. Building on the success of the pilot project, the initiative will include conducting a digital survey of Kharif crops in 400 districts this year. It also plans to develop population-scale DPI applications for various sectors, including credit, e-commerce, education, healthlaw and justice, logisticsMSME services and city management. These applications are expected to drive productivity gains, create business opportunities and support innovation in the private sector. All other customs and tax servicesincluding rectification and appeal orders, will be digitized within the next two years.