Union Budget 2022-23: There are some growing expectations and calls for change, which can further enhance the growth of this sector
With the Union Budget 2022-23 scheduled to be announced on February 1, every sector has certain hopes and expectations from it. The coworking industry is no different, particularly since the demand for such spaces has soared amidst the new normal that COVID-19 brought about.
The pandemic created an unprecedented situation for businesses across sectors all over the country. Given the COVID regulations in place and economic losses faced, a huge number of businesses have moved from a fully office-based working setup to a more hybrid working environment.
Co-working spaces were a boon here, as businesses could offer flexible working options to employees and yet have well-equipped official places to work from without having to incur high rents. This was particularly beneficial for smaller businesses as they could not afford independent working spaces with staff at low numbers. The increase in the demand for coworking offices over the last 18 months has also encouraged real estate developers to join hands with coworking operators to create more such spaces.
There are some growing expectations and calls for change, which can further enhance the growth of this sector as entrepreneurs navigate their way through the never-ending pandemic situation.
Tax benefits expected
First and foremost, with the landmark growth of the sector, there should be tax benefits given to the industry. The TDS rate applicable to coworking spaces stands at 10 percent as of now. It is expected that the Government will reduce the TDS rate such that it not only promotes market growth but also helps in the effective management of cash flow.
Reduction in registration charges, stamp duty
The co-working space industry relies heavily on early and mid-start-up companies, as they are the ones that make the maximum use of such spaces. However, expenses like registration charges and stamp duty are borne by the coworking offices at the registrar offices, and a reduction of these charges would directly benefit the end-users as they will have to spend a relatively lower amount for the services.
The industry is also hoping that there will be an infrastructural push from the Government in addition to a single-window clearance system, for it will help in the faster initiation of coworking offices in non-metropolitan cities.
According to a report published by Cushman & Wakefield, coworking operators leased 21 percent more office area in 2021, which is approximately 4.91 million square feet. This was a significant jump from the previous 4.05 million square feet. According to another report by JLL, India’s coworking space market is likely to cross 50 million square feet by 2023. This is because coworking operators will go beyond the current establishments in metro cities and expand their presence in smaller cities across the country.
These reports provide an insight into India’s co-working sector and the increase in popularity for such spaces among organizations today. As the pandemic has changed the dynamics of business, the growing need to move away from rigid, long-term office spaces to more flexible working spaces is quite clear.
Co-working spaces have provided both employees and employers with the comfort of working from workplaces near their homes. This setup matches the fundamental principle of striving companies like Google and Microsoft: increasing productivity by ensuring the comfort of employees.
Thus, it is clear that investing in the co-working space sector has a clear benefit for all. Furthermore, if the Government upholds the expectations of the coworking space sector, not only will it redefine how businesses work, but also ensure overall economic benefits. The sky is the limit for the coworking space industry in India. However, this can only be achieved with the support of the Government through the Budget 2022-23.
The author is CEO, 91Springboard-shared workspace provider. Views are personal.