17 Feb STARTUP INDIA PROJECT- Boost for Innovators

STARTUP INDIA PROJECT

Prime Minister PM Narendra Modi on Saturday(16.01.2016) unveiled a slew of incentives to boost start-up businesses, offering them a tax holiday and inspector raj-free regime for three years, capital gains tax exemption and Rs 10,000 crores corpus to fund them.

He also announced a self-certification scheme in respect of nine labor and environment laws and said there will be no inspection during the first three years of launch of the venture. Also, a liberalized patent regime is being brought to help start-up businesses register patents, for which the fee will be slashed by 80%.

Addressing the first conference of start-up entrepreneurs, Modi announced an action plan to boost such ventures which are seen as key to employment generation and wealth creation.

Meaning of Startup

The term “startup” has also been defined for the purpose of the Government schemes. Startup means an entity, incorporated or registered in India not prior to five years with annual turnover not exceeding Rs. 25 crores in any preceding financial year, working towards innovation, development or deployment or commercialization of new products, processes or services driven by technology or IP. Provided such entity is not formed by splitting up or reconstruction of a business already in existence.

Also, for availing the “startup” status, the entity has to obtain certification from the Inter-Ministerial Board, setup for such purposes

Bullet Points of Startup India Policy:-

1. Tax exemption for start-ups for three years.
2. 10,000 crores corpus fund to support start-ups.
3. Capital gains tax to be exempted for venture capital investments.
4. 80% reduction in patent registration fee.
5. to ensure 90-day window for start-ups to close businesses.
6. Self-certification compliance for start-ups across India.
7. No government inspection for three years for newly-formed start-ups.
8. New scheme to provide IPR protection to start-ups and new firms.
9. Innovation programme to target 10 lakhs children.
10. Government is all set mobile app and portal will be rolled out for interacting with the government and regulatory institutions
11. Tax exemption for start-ups for three years

Startups with the certain technological and unique idea which need support in the initial years due to high cost of innovation and compliances. Startups commencing their business after 01st April, 2016, shall be exempted from taxation for the first 3 years of its operations subject to terms and conditions and rules notified later on.

The first few years of a startup are always risky. Hence, this exemption would be strategically boost for the startups.

2. 10,000 crores corpus fund to support start-ups

Government will support the startups with the corpus fund of Rs 2500 crores initially which will be limited to Rs 10000 crores in four years. This will help the startups to the great extent.

3. Capital gains tax to be exempted for venture capital investments.

Startups have been exempted from paying capital gains tax if such gains are invested in the Fund of Funds recognized by the Govt,

4. 80% reduction in patent registration fee.

Under this scheme, startups will be granted 80% rebate in Govt costs in filing of patents. The government also focus on reducing the time taken in the various registration and trade marks to make it faster for the startups.

5. to ensure 90-day window for start-ups to close businesses.

Now a days closing of unsuccessful business is very costly and time consuming and normally entrepreneurs will go away without following this lengthy process and don’t want to invest further in compliances.

To simplify the closing down of business Government will ensure 90 days window for end to end solutions to the investors and business.

6. Self-certification compliance for start-ups across India.

Government will allow startups to self certification compliances for the initial period of three years to ensure timely and reduce time taken in various compliances. Startups will do it through the special Mobile based app launched for the same.

7. No government inspection for three years for newly-formed start-ups.

Labour laws inspections for the startups will be costly affair and diversion of time and energy in the compliances. Government will exempt the startups for the initial period of three years for all types of labour laws inspection and business will focus o=in their core activities. Once the startups will run properly they will be able to bear the cost of these compliances.

8. New scheme to provide IPR protection to start-ups and new firms.

A panel of facilitators shall be empanelled by the Comptroller General of Patents, Designs and Trademarks, who shall also regulate their conduct and functions. Facilitators shall also be responsible for providing advisory on different IPRs, their protection and promotion globally, assist in filing of Trademark applications under relevant acts. The facilitators would also be appearing on hearings on behalf of the startups.

Central Govt shall bear the entire cost of the facilitators and startups shall bear only the statutory fees.

9. Innovation programme to start target 10 lakhs children.

Government will target school childrens for their innovation programmes and groom them for the future.

10. Government is all set mobile app and portal will be rolled out for interacting with the government and regulatory institutions

Government will make available one mobule app for the startups for interacting with the government authorities and compliances. This app will help the entrepreneurs to interact with government officers and get their queries and complaints resolved with the specific times frames.

In our view Modi Government initiatives for the startups will boost our economy with the changes in the current compliances regulations and tax sops. Business around the world will prefer India as a country for good investment and future potential.

(This article is contributed by Ankur Kapil, Chartered Accountant in Practice and can be reached at ankurkapilca@gmail.com)