Budget 2024 Expectations For Office Culture In SMEs: TDS, GST Rate, Salary Limit Hike And More

The co-working sector is a host of key wishes that they expect from Finance Minister Nirmala Sitharaman during her speech for Union Budget 2024. The sector desires measures like lower GST rate, hike in salary limit, concessional rate of TDS, revision in input tax credit under GST and continued improvement in the ease of doing business.

Manas Mehrotra, Founder, 315Work Avenue, a leading coworking player said, the country is seeing a new office culture given the change in work patterns across the world and new preferences of the workforce. Understandably, the coworking industry has become more relevant than ever with the demand surging significantly in recent times owing to its affordable pricing options and flexible work culture. Large enterprises too have shifted gears to coworking space as they embraced the hybrid work model to suit their organizational requirements.

India continues to be the fastest-growing flex office market in the APAC region and is set to account for one-fifth of the office market by 2030, he said.

Taking into consideration the popularity of hybrid working, Mehrotra said, "We have a few expectations around GST and taxation from the upcoming Union Budget that can further accelerate the growth of this sector."

In recent years, Mehrota highlighted that the entrepreneurial landscape has undergone a significant change and coworking spaces have emerged as a transformative force in India's startup ecosystem.

He added, "Some of the measures that we could look forward to include lower GST rate for small-scale coworking clients. This will significantly help the coworking industry boost their footprints by attracting small start-ups to be part of the industry as well as increase the revenue collection to the government."

Further, he said that the salary upper limit of 25k could be enhanced to 40k and the timeline from 3 yrs to 5 yrs to enable start-ups/coworking entities to enjoy the benefit of sec 80JJAA as these industries are generating a greater volume of employment. Input tax credit under GST is an important issue that concerns the coworking sector.

Moreover, Mehrotra expects the budget would enable coworking firms to claim input credit on work contracts and construction services supplied so that it is passed on to companies who lease out space for coworking and thereby reduce their overall costs.

Also, Mehrotra believes a few other aspects need attention. Typically stamp and registration duties are high and since both the landlord as well as client agreements are subject to these charges, hence, either concession in such stamp duty rates or allowing twice the duty paid as expenditure under income tax will encourage even the small agreements to get registered.

According to him, an important requirement for the coworking industry has been a Lower/Concessional rate of TDS which will improve the working capital.

Another measure, as per Mehrotra, could be announced to intensify the growth of the coworking sector is a further and continued extension of tax holidays for start-ups as they would be motivated to scale up their business and enhance investment.

He added, "We also believe that a significant push to infrastructure and single-window clearance system will help in the faster establishment of coworking spaces in non-metro cities as well. Overall, the coworking sector is expecting continued improvement in the ease of doing business which will play an important role in the growth of the coworking industry in the near future."

Going forward, he lastly said, "We hope that the government looks at addressing regulatory concerns and encouraging more coworking firms to open up through a series of both financial and non-financial incentives and ensure faster economic growth. As we move forward, the demand for coworking spaces is only set to witness greater traction from companies across segments."