Budget 2021: Coworking office space has seen tremendous growth in recent years, however, currently the applicable TDS rate on coworking services is 10% as coworking companies offer rental of movable and immovable property. The TDS rate must be reduced as the industry will eventually provide real estate solutions to clients at economical rates, thus contributing to a better flow of working capital, said Mr. Manas Mehrotra, founder of 315Work Avenue, a coworking company. leading. He added that there is also a need to reduce the Goods and Services Tax (GST) charged to customers of coworking spaces. Currently, coworking spaces charge 18% GST to all customers, which has a big impact on startups.
It is necessary to reduce the GST to the lowest level for upcoming startups, as this will have a significant impact on their respective budgets. In addition to the GST, the government should allow coworking companies to claim input credits on labor contracts and construction services provided as outlined in the GST provisions. This would verify the increased output of cash coworking businesses that are currently experiencing. The GST input tax credit could also be extended to developers so that it can be passed on to businesses that rent space.
Institutional capital is crucial for coworking spaces that depend on funds for multiple factors. Mr Mishra explained that the government must also allow banks to provide loans to coworking businesses against the cash flow of coworking players. In addition, to increase funding for the coworking sector, the government should provide investment benefits to investors of these coworking spaces. In addition, in order to move from metropolitan cities to Tier II and Tier III markets, the sector is also anticipating additional infrastructure push from the government, and a one-stop customs clearance system would aid in the faster establishment of ‘coworking spaces.
The government should recognize coworking spaces under special regimes such as Real Estate Investment Trusts (REITs) and offer tax benefits to manage the industry for better growth. Since many entrepreneurs who opt for coworking solutions are early stage and middle-of-the-road start-ups, the government could consider lowering the current rate of registration fees and stamp duty to register documents at registrars. , because the high rates weigh them down. This will stimulate both start-ups and coworking spaces.