(MENAFN- Khaleej Times) Question: Indian startups have been receiving funds from private equity players between 2019 and 2021. However, there is a declining trend which has currently been reported. Will these startups be able to survive especially after the failure of two banks in the US?
ANSWER: In 2021, venture capitalists invested $38.5 billion in Indian startups. This has fallen to $25.7 billion in 2022. The global economic downturn forced investors to go slow on deployment of capital in new age companies. This particularly affected consumer technology businesses where the investments went down by 55 per cent to less than $10 billion in 2022. Big ticket deals of $100 million each dropped to 48 in 2022 from 92 in 2021. This clearly shows that global investors have become unduly cautious on large ticket deals. This has resulted in some unicorn startups laying off employees and undertaking cost saving measures. The problem has to some extent taken a serious turn after the collapse of two banks in the US. The Indian government has assured over 450 Indian startups that they would look into their difficulties as a result of the prevailing global scenario. The Minister for IT & Electronics has advised Indian startups to rely on funds from the Indian banking sector. An online link has been provided which would enable these companies to send their inputs and suggestions. In his opinion, startups which are able to retrieve their funds from the two banks should open a dollar account and deposit the funds in Indian banks which operate in the GIFT City which caters to offshore entities and non-residents.
Question: Digital payments are growing in India but a large section of the rural population is left out. I am told that infrastructure in these areas is quite primitive. What steps are being taken to remedy the situation? H. P. Ranina is a practicing lawyer, specializing in tax and exchange management laws of India. - KT file
ANSWER: Currently about 260 million transactions take place everyday using the Unified Payments Interface (UPI) platform. This platform, which is operated by the National Payments Corporation of India, is running three systems simultaneously so that if there is a problem in one, the other two can continue operations. The Reserve Bank of India is initiating a 75 digital villages programme. Under this, payment system operators will adopt 75 villages across the country and convert them into digital payment-enabled villages. Further, the RBI has launched campaigns to increase awareness among users so that they do not share confidential information based on fraudulent messages. The RBI is working with enforcement authorities to safeguard the interest of the public at large.
Question: I have a fairly large plot of agricultural land. I have been approached by builders to sell the plot for which I have received attractive offers. If I decide to do so, would I be exempt from payment of capital gains tax?
ANSWER: Under section 54-B of the Income-tax Act, capital gains are exempt on sale of agricultural land if the amount is reinvested in the purchase of another plot of agricultural land within two years from the date of sale of the old plot. However, a mandatory condition to be fulfilled is that the plot of land which is sold should have been used for agricultural purposes for atleast two years prior to the date of its sale. In other words, if the land was not cultivated and was left barren during the two year period prior to sale, the capital gains arising on sale of such uncultivated land would be liable to tax and the exemption under section 54-B would not be available. Merely because the land that is sold is classified as agricultural land in the records of the government authorities would not be sufficient to claim exemption from tax. The tax authorities and courts in India have insisted that the land should have been cultivated for at least two years prior to the date of sale so that the tax exemption can be availed of. Further, the new plot of land purchased should be retained for three years and also be used for agricultural purposes.
H. P. Ranina is a practicing lawyer, specializing in tax and exchange management laws of India.
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