SUMMARY
Section 56(2)(viib) of the Income Tax Act 1961 would not be applicable to the startups registered under DPIIT
Amazon says that it is ready to invest more in its India business
Paytm’s valuation was hiked by 25% to touch $15 Bn
We bring to you the latest edition of News Roundup: Indian Startup Stories Of The Week!
In one of the most important development in the Indian startup ecosystem this week, the Ministry of Corporate Affairs (MCA) amended rules to now allow Indian companies to raise more share capital without diluting the voting rights of all existing shareholders. Not only this, Pune-based software consulting firm, Alphalogic Techsys has become the first startup scheduled to be listed on the Bombay Stock Exchange’s (BSE) Startup platform, on September 5.
Also, finance minister Nirmala Sitharaman has now announced that Section 56(2)(viib) of the Income Tax Act 1961 would not be applicable to the startups registered under DPIIT. The government will set up a dedicated cell under a member of CBDT for addressing problems of startups. Any startup with any income tax issues can approach the cell for quick resolution.
Important Indian Startup News Stories Of The Week
Amazon Bullish On India, Food Delivery Plans And More
- Despite the current economic slowdown, Amazon says that it is ready to invest more in its India business. It will be focussing on long-term goals instead of getting distracted by the short term situation such as the current economic condition of the country.
- Amazon’s grocery delivery vertical, Prime Now, will reportedly drive the ecommerce major’s food delivery plans in India. Amazon might partner with Ola’s Foodpanda to foray into food delivery. The partnership might also extend into an acquisition.
- Amazon has inaugurated its first owned office property outside the USA, in Hyderabad. The new campus is said to be the largest Amazon facility globally. The campus is spread across 9.5 acres. It will house over 15K employees out of its 63K workforce in the country. It is the largest tech base outside the USA that houses 1.5Mn contract employees.
Paytm’s Valuation Up By 25%, Tie Up With Sheroes And More
- Paytm’s valuation was hiked by 25% to touch $15 Bn. Esops worth $150 Mn were sold by Paytm’s employees to New York-based investors nearly three months ago, valuing the company at $15 Bn.
- Paytm has signed a strategic partnership with women community platform SHEROES to introduce a social community platform exclusively for women on Paytm app. The platform is being added on Paytm Inbox as an interactive social feed where women can engage in several topics, including health, careers, relationships, cooking, and hobbies.
- Paytm plans to expand its ecommerce marketplace Paytm Mall to the Middle East. eBay will help Paytm to expand its catalogue to the market. Paytm to do the same for eBay in India. The company has already started testing the market, says Rudra Dalmia, executive director of Paytm
IRCTC Files Draft Papers To Raise INR 500 Cr-600 Cr In IPO
The government-owned Indian Railway Catering and Tourism Corp. Ltd (IRCTC) has filed draft papers for its initial public offering (IPO) with the Securities Exchange Board of India (SEBI) on Thursday (August 22). The government is selling its stake of about 12.5% to fetch INR 500 Cr-INR 600 Cr. IDBI Capital, SBI Capital Markets and Yes Securities will handle the share sale.
Zomato, Dineout In Trouble
Complaining about high discounts, commission burden and GST tax burden, the National Restaurant Association of India (NRAI) had initiated a #LogOut campaign to delist member restaurants from the unfair partnership with the food service aggregators (FSA) such as Zomato, Dineout, Nearby, Magicpin and EasyDiner.
Now, the Federation of Hotel & Restaurant Associations of India (FHRAI) has jumped in and has warned of a nationwide protest against apps such as Zomato and Dineout, unless they’re willing to initiate talks to clear out the issue of heavy customer discounts to have a win-win outcome for both parties. The National Restaurant Association of India (NRAI) has now reportedly said that the foodtech platforms will change their features to lower discounts offered at these restaurants.
What The Indian Government Is Up To?
- Ministry of Electronics and Information Technology (MeitY) has sent a letter to a select stakeholders seeking further clarifications on their earlier feedback to the draft personal data protection bill. The government has reportedly sought responses from these stakeholders by August 25, 2019.
- Google has signed a Memorandum of Understanding (MoU) with the Telangana state government to localise official web and governance content. Under this MoU, Google will work to help digitise the state government’s content in Telugu using digital publishing tool, Navlekha. The digitisation is expected to help common citizens access information and services on government websites in local languages better.
- The Tamil Nadu government seeks to link Aadhaar to social media profiles of users in the country to check the circulation of fake, defamatory and pornographic content as well as anti-national and terror content. However, the Supreme Court of India has warned the government about the privacy implications of any potential move forcing users of social media platforms to link their online accounts with their Aadhaar.
- Airtel will implement a future-ready state wide area network (SWAN) for the Uttar Pradesh government to provide citizens access to the government’s digital services. The service is another initiative for the grassroots penetration of the egovernance services under the various state and central government policies, which were otherwise challenging due to the vast size and diversity of the state.
- The government is tweaking foreign direct investment (FDI) limits in aviation and insurance intermediation, along with clarificatory notes that will clear up grey areas in the FDI policy.
- India government has reportedly brought imports and resellers of ecommerce platforms under the scanner for allegedly evading taxes while bringing goods into the country. Shipments worth a few hundred crores of rupees have been stopped at the ports as the customs department has increased security to catch tax and duty defaulters, which has led to a delay in deliveries.
- The Indian government has been extending its focus on ecommerce beyond regulating the existing players and had proposed Bharatcraft, an ecommerce marketing platforms like Alibaba and Amazon. Union minister Nitin Gadkari has now reportedly said that this has the potential to achieve revenue of around INR 10 Lakh Cr in two to three years.
From The World Of Fintech
- India’s finance ministry has amended the country’s Prevention Of Money Laundering Bill (PMLA), to introduce a new process of carrying out digital KYC (know your customer). With this amendment, the ministry has asked fintech companies to develop applications for digital KYC which shall be available at customer touchpoints such as retail or banking outlets, physical stores and other customer service centres.
- In an attempt to play it safe, Flipkart-owned digital payments company PhonePe is looking to start offline KYC for its users. The company is planning to start a pilot to do physical KYC of customers using its existing agent base of 8,000 people.
- An association of 16 licensed peer-to-peer lending startups have written to the Reserve Bank of India (RBI) addressing their grievances regarding guidelines issued in 2018 that limited the amount of credit such lenders could offer customers.
- The government had recently said that businesses with an annual turnover of INR 50 Cr will not have to pay a merchant discount rate on debit card and other digital modes of transactions, excluding credit cards. However, the plan hasn’t gone down well with global card payments group Visa.
- In a circular on Wednesday (August 21), the Reserve Bank of India (RBI) permitted processing of e-mandate on credit and debit cards for recurring transactions (merchant payments) with a cap of INR 2,000 from September.
Traders Protest Chinese Products, OYO Hotel Protests And More
- The Confederation Of All India Traders has given a call to boycott Chinese products and sought custom duties of up to 500% on these goods. This development comes after China supported Pakistan at the United Nations Security Council on the abrogation of Article 370 in India related to the special status for the erstwhile state of Jammu and Kashmir.
- Cure.fit had to put a pause on its latest product launch— Gym.fit. The order came as a temporary injunction for Bengaluru-based gym booking marketplace BookYourGame by Bengaluru City Civil Court.
- Independent protests against Ola by small hotel owners are springing up in mid-tier towns like Nashik, Pune, Kota, Manali, Jaipur and Ahmedabad as well as Bengaluru and Delhi. Hoteliers claim that OYO has been cheating them of their promised returns and minimum guarantees by levying a slew of charges, often without informing them.
- Claiming exclusive rights over its content, TikTok has recently sent takedown notices to Sharechat after users uploaded TikTok videos on the Indian regional language social media platform. The company said that it has the sole right to initiate and control legal action over this.
Digital Tax On Google, Corporate Tax Reduction And More
- The Central Board of Direct Taxes (CBDT) is looking to send a bigger tax bill to global tech giants such as Amazon, Google, Uber and Facebook who invoice their revenues out of India and operating in the country with minimum profits. Tax officials will be discussing the matter at a meeting of the Organisation for Economic Co-operation and Development (OECD) next month.
- Finance minister Nirmal Sitharaman has said the corporate tax rate for companies with over INR 400 Cr turnover will be gradually reduced from 30% to 25%, after the move drew criticism at the Union Budget. She also said that Indian wealth creators and entrepreneurs will be given all kinds of support.
- The panel, headed by CBDT chief Akhilesh Ranjan, has reportedly suggested incentives to startups and a new concept of settling disputes through mediation between the taxpayer and a collegium of officers. The suggestions were submitted to finance minister Nirmala Sitharaman on Monday (August 19). The government is also speculated to release the report of the panel in the public domain for consultations after examining the recommendations.
Other Important News Stories Of The Week
Engineer.ai Accused Of Exaggerating Its AI Tech
A report in the Wall Street Journal quotes several past and current employees to illustrate how Engineer.ai has been misleading just about everyone with its tall claims on using AI to develop apps. The company’s CEO and founder, Sachin Dev Duggal, released a detailed statement clearing out the same. He said, the company never claimed to “automated software development,” they’ve always preferred the term “human-assisted AI.” The company has laid stress on being transparent to customers, investors and anyone they’ve interacted with.
Reliance Jio Adds 8.2 Mn New Users
A report released by the Telecom Regulatory Authority of India (TRAI) for the changes in numbers of telecom connectivity from May 2019 to June 2019 shows that Jio managed to add 8.2 Mn new users. BSNL, despite financial and operational issues, is the only other telco to have a positive net subscriber addition, as it registered 0.2 Mn new subscribers. Jio is in second position with 28.9% of the market, whereas Bharti Airtel is third with 27.49% subscribers.
Suvidhaa Enters Into Ecommerce Segment
Newly launched marketplace, Suvideals.ooo, which is under beta testing with close group of users, will reportedly focus on selling only one branded product per day at highly attractive liquidation prices until inventory lasts. The platform aims to tap “bottom of pyramid customers” by giving them competitive deals for the price-conscious customers, especially in semi-urban and rural markets in the country. The marketplace will be launched on the technology platform it acquired from Infibeam Avenues Ltd last year.
Airtel Payments Bank Incurs Loss
Airtel Payments Bank has filed a loss of INR 338.8 Cr in the financial year 2018-19. The company’s loss has increased by 24%, compared to last year’s loss of INR 272.6 Cr. Currently, payment banks are facing hardships in the country due to its existing rules.
OYO Adds Hindi Support
The company announced that it has enabled multilingual support on its customer app and mobile website. The company said that with Hindi language support, OYO aims to extend support to more users in tier 2 and tier 3 cities in India and reach out to the growing number of vernacular internet users.
Xiaomi Launches MiCredit
Xiaomi’s Mi Credit will be offering loans of up to INR 1 Lakh at an interest rate starting from 1.8%. The media report claims that Mi Credit is currently in the beta phase and is scheduled for launch in the coming weeks.
Public WiFi Hotspots Will Grow 6x To Reach 2.1 Mn By 2021
In the increasingly digital-focused India, a report by DigiAnalysys expects that public WiFi hotspots in the country will see 6x jump to reach 2.1 Mn in 2021 from 306K in 2019. It believes that the growth will come on the back of both central and state governments.
Flipkart Introduces Doorstep Smartphone Repair Service
Once the complaint is registered, a pick up will be arranged and the phone will be delivered to the customer after repair. Flipkart has also assured that the device will be repaired and returned within 10 days and if a customer does not receive the phone within 10 days, they’ll be eligible for a Flipkart e-gift voucher worth INR 500.
INR 5 Lakh Penalty For E-Cigarette Ban Offenders
The ministry of health has reportedly proposed a nation-wide ban on electronic cigarettes or electronic nicotine delivery systems (ENDS) with a prison sentence and stiff monetary penalties for offenders. The ministry has reportedly proposed a prison sentence of up to three years, with a penalty of up to INR 5 Lakh, for repeat offenders of the ban. While the first-time offenders are proposed to face a prison term of up to one year and a fine of INR 1 Lakh.
Stay tuned for the next week edition of News Roundup: Indian Startup News Stories Of The Week!
