Union Budget: Advertising experts call for tax reforms, focus on start-ups

The world is now looking at India with renewed focus, actively seeking investment opportunities with increased intensity. With Finance Minister Nirmala Sitharaman all set to present the Union Budget on Friday, most players in the advertising and marketing industry are keenly waiting to see how the Budget announcements will affect the market and the flow of investments. 

We spoke to advertising experts about their expectations from Union Budget 2019 and this is what they had to say: 

Advertising is a very sentiment-driven business in India says, Ashish Bhasin, CEO Greater South, Dentsu Aegis Network and Chairman & CEO India. “Anything that drives GDP growth, drives advertising growth even more. In fact, the rule of thumb is that for every 10 per cent growth in GDP, advertising grows by 1.5 per cent. So, the new budget needs to be growth-oriented, needs to put more money in the pockets of the rural and urban consumers, to propel spending,” said Bhasin. 
 
He further said there was an urgent need for tax reforms and direct tax rates for both corporates and individuals need to be brought down noticeably and immediately. “GST on advertising at 18 per cent is just too high. It needs to be rationalized at 12 per cent and the process and procedures need to be simplified as they are cumbersome, unproductive and waste a lot of time. India is poised for a decade or more of growth. Some bold steps taken in this budget will help make that a reality,” Bhasin added. 

According to Sabyasachi Mitter, Founder, Managing Director, Fulcro, the Union Budget should strive to provide a balance between tax collections and incentives. “The Modi 2.0 government has set forth an ambitious target to make India a $5 trillion economy in the next five years. To achieve this, we need to spur consumption in a big way while increasing investments in infrastructure. This will call for a fine balance between tax collections and incentives. From my perspective, start-ups and MSMEs should be a focus for generating employment as well as driving GDP growth. The start-up policy could expand to include all start-ups in any employment generating sector with funding from any source. 

“Expansion in Mudra loan disbursals would go a long way in generating a new breed of self-employed who will add to the economy while generating jobs. Skill India should get greater allocations. Start-ups investing in education and skill development of all kinds should be given incentives and tax breaks. While we cannot expect major changes in GST or Income Tax, some relief in Standard Deduction or tax slabs for the salaried middle class could spur consumption. Doing away with LTCG could further drive the sentiment in the stock market leading to greater value being unlocked. Digitisation and Digital India needs a greater push.”

Sharing his expectations from tomorrow’s Union Budget announcements, Shrenik Gandhi, Chief Executive Officer and Co-Founder, White Rivers Media, said the world stands at the brink of the fourth Industrial Revolution and India can spearhead Industry 4.0 globally. “The growing emphasis placed on technological disruptors like AI, IoT, robotics, and machine learning in the Interim Budget bears testimony to the same and the entrepreneurial ecosystem of the country will play a pivotal role.”

Chetan Asher, CEO, Tonic Worldwide says that with the Modi government’s second term there is hope that the focus on spurring economic growth will be strong. “Economic growth will directly affect the growth of the advertising industry. I am also optimistic that we will see a renewed focus on growing digital infrastructure and smart cities. This will lead to faster digital adoption. I wish taxation would be further simplified and Angel Tax is removed completely, and there's enough provision to help India become the start-up capital of the world.”

According to Kuldeep Chaudhary, Chief Executive Officer, ADOHM, India is already experiencing a complete change in the way online advertising impacts every business and its government. “The presence of technologies based on Artificial Intelligence can further increase the interaction between consumers and companies. I would say that the government's action on the economic and fiscal incentives for technology companies is fundamental. On this account, the advertising industry is capable of fostering the growth of other sectors, and they are interconnected,” said Chaudhary.

“I hope to see an increase in incentives for the national programme in Artificial Intelligence and more Wi-Fi connection points, making it possible to bring new users and customers to Indian companies. Also, we need to discuss Angel Tax provisions in order to bring transparency into the Angel Funding process, something very important for start-ups like us,” Chaudhary added.

Roopak Saluja, Founder & Chief Executive Officer, The 120 Media Collective, has high expectations from Modi 2.0 Budget. Saluja remarks, "The government's immediate focus will need to be on stimulating consumer demand as it has all encompassing impact on the growth agenda over the years ahead. I expect some measures in the form of labour reform, incentives and subsidies, etc to be implemented immediately. The promised 25 per cent corporate tax ceiling is likely to be implemented this year too."

He adds, "Being sector specific, as the government recognises media & entertainment as a major instrument for India to exercise its soft power, I expect there will be much-needed stimulus to incentivise our growth as a global entertainment player."

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