The Venture Capital and Private Equity Association (IVCA) has expressed its elation at all four of its recommendations made to the Finance Minister being addressed in the Union Budget.

The first recommendation was to form an expert committee to study the complex inter-ministerial and regulatory issues around the Alternative Investment Funds (AIF) industry. An expert committee has been set up, it points out.

Its second recommendation of creating thematic fund-of-funds, with Private-Public partnerships, has been given voice. It has applauded the choice of fund themes in emerging areas like climate transiton and deep-tech.

The third recommendation was to align the rates of taxation of long term capital gains tax (LTCG) both for the public markets and private markets. One part of it has been addressed, with the surcharge being made uniform for private and public market LTCG at 15 per cent.

“Most of the domestic money for the AIF Industry in India still comes from the large family offices where the rate of surcharge was 37 per cent, and that now stands reduced to 15 per cent, the same as that of public markets. This will enhance the supply of investments into start-ups and the AIF industry,” notes the association.

The last suggestion was on ESOP taxation for startups to be brought in line with the global practices. While that has not been fully addressed, the industry body expressed its happiness that the government has extended the period of eligibility for start-up taxation by one year, to March 2023.

“Funding India’s start-up ecosystem and the next gen entrepreneurs is the best way to make sure that “new India” becomes a reality,” said Gopal Srinivasan, Chairman, TVS Capital Funds, and Board Member, IVCA.

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