Ed-Tech Sector in Budget 2020

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As the finance minister Nirmala Sitharaman, announced the Union Budget 2020 on February 1, there were huge announcement to encourage entrepreneurs and startups, from deferment of taxation of ESOPs, extending the period to claim a tax holiday, setting up more data centres, setting up a seed fund for startups, creating an investment clearance cell and investing more in Bharatnet. The blog is here to list down the key essential, which come out from Budget 2020 for the Ed-Tech Sector of the country in more detail.

Startups working under the domain of Education, Healthcare and Logistics are more popular in the budget 2020 The finance minister Nirmala Sitharaman announced in her Budget speech, that India will start issuing online degrees at top 100 educational institutes, a step that could boost educational technology startups including Coursera, Upgrad, Leverage Edu, etc. Not to mention there was a considerate emphasises drawn onto the condition of poor who cannot afford regular forms of education. For these sections, she proposed the introduction of online degree programmes, that can be accessed from mobiles to provide education to those who cannot follow the pace of regular learners. According to various experts across the country, this step by the government aims to increase India’s low gross enrolment ratio (GER). A GER is a  percentage of students in higher education of the total eligible population of the age group of 18-23 years old.

To give a new meaning to startups the DPIIT circular issued last year in February, the Budget 2020 raised the turnover limit for startup by facilitating them with 100% tax deductions. Whereas the current profit value was Rs 25 crores but now it has been raised to Rs 100 crores. In the Employee Stock Ownership Plan, the government announced that the tax exercise will be deferred from the time of exercise to 5 years up until the employee sell out their shares or leaves the organisation, whichever happens, earlier. The Education Industry welcomes the move of the administration to extend the turnover goal for tax incentives for startups. One of the famous trade unions NASSCOM said that the BUDGET 2020 is promising simplified ESOP policy and extended the tax remunerations for up to 100 crore startups over a 10 year period which will benefit small comapnies.

  • Seed Fund, Investment Clearance Cell to boost the Foreign Direct Investment (FDI)

In the Budget 2020, the finance minister Mrs Nirmala Sitharaman laid down the provision of setting up of an online portal to facilitate quicker business clearances, an investment clearance cell for entrepreneurs and a seed fund to support early-stage startups. According to Bhavin Turakhia, CEO-Flock, the above provisions in the budget, will collectively attract foreign investment in Indian startups.

  • DigitalPush & BharatNet

One of the biggest boosts for the digital sector in the 2020 Budget was the sanctioning of Rs 6000 crore to Bharatnet scheme for 2020-21. The finance minister said that the target for this year is to link 100,000-gram panchayats this year with Fibre to the Home (FTTH) connections through the Bharatnet scheme. The big leaders of Business and its members said that this move will help startups and entrepreneurs to scale up the business, across the country (especially in Indian small towns).

  • Ed-Tech sectors to cheer with education policies

To deliver a higher quality of Education, Budget 2020 enables the government to source the External Commercial Borrowings as well as FDIs. This is being done to meet up the international standards of education through the advancements in technology. Making Ed-tech labs, the introduction of AI tools in the sphere of Education is something to look upon for teachers and for students as well. Introduction of Indian SAT is another leading decision taken by the Finance Minister & the government in making India a study destination for many international students from neighbouring countries.

      Akshay Chaturvedi, Founder and CEO-Leverage Edu, who is ranked in the list of Forbes India 30, spoke that the move is a big boost for edtech startups and praised the Union Government’s focus on education.

Hope the blog has helped in highlighting the key essential points of Budget 2020, which will help the Ed-Tech sector grow multifold in the coming years.

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