In a joint statement, one of the top ecommerce firms in the countrySnapdeal along with audit and consultancy firm PwC has asked for relaxation of restriction on carry forward and set off of tax losses under section 79 of Income-tax Act to reduce risk for promoters and investors in investor funded digital businesses. This comes ahead of the Union Budget 2016-17, which will be announced on Monday. www.taxxcel.com
Kunal Bahl, CEO of Snapdeal said it is imperative that regulation, policy and business evolve in sync and recalibrate often so that the rules of engagement are mutually clear, contemporary and relevant. “The responsibility of this lies both with the government and the industry,” said Bahl. Snapdeal plans to regularly come up with such communiques with PwC focusing on policy matters relevant for digital businesses.
Relaxation of the Section 79 of the Income Tax Act has been one of the top demands of the industry since they are unable to carry forward and set off the business losses that they typically incur in the initial years of their operations, because of the dilution of the original promoter shareholding beyond 49%, to other investors/VCs/PE players.
Sandeep Ladda, partner and leader – technology and eCommerce, PwC India said “The communique attempts to present a picture of the real-time issues facing the industry and suggestions on how to tackle them in an effective manner.”
The paper makes the case that with dynamic infusion of funds in modern start-ups, the shareholding patterns change often.