A START IN THE RIGHT DIRECTION

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August 26,2016
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Prime Minister Narendra Modi gave away a string of incentives to business entrepreneurs, founders and investors at Vigyan Bhawan on 16th January and summed it up best in saying “….We have a million problems but at the same time we have over a billion minds”. The Government seeks to reward those billion minds through the “Start Up India” Initiative. The Start Up India Scheme promises ease of doing business, taxation benefits and intellectual property protection to ‘Start Up’ companies i.e entities incorporated or registered in India not prior to five years with annual turnover not exceeding INR 25 crore in any preceding financial year, working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property and having a certification from the Inter-Ministerial Board, setup for such purpose. The goody-bag available to these ‘Start-Up’ entities will include: 1.A dedicated Mobile App, Portal and Start Up India Hub. The Mobile App will enable setting up a start up in a day through registration and will serve as the single platform for Startups for interacting with Government and Regulatory Institutions for all business needs. The App shall be made available from April 01, 2016 on all leading mobile/ smart devices’ platforms. 2.Startups shall be allowed to self-certify compliance (through the Startup mobile app) with 9 labour and environment laws. In case of the labour laws, no inspections will be conducted for a period of 3 years. Startups may be inspected on receipt of credible and verifiable complaint of violation, filed in writing and approved by at least one level senior to the inspecting officer. 3.Intellectual Property Protection through the scheme for Startup Intellectual Property Protection (SIPP) which provides fast-tracking of Startup patent applications, panel of facilitators to assist in filing of IP applications (wherein the Government will bear the facilitation costs) and rebate of 80% on filing of patent application vis-à-vis other companies. 4.Relaxed norms of Public Procurement will be made for Start-Ups whereby the Government shall exempt Startups (in the manufacturing sector) from the criteria of “prior experience/ turnover” without any relaxation in quality standards or technical parameters. 5.Faster Exit process for Start-Ups to make it easier for them to wind up operations in case of a business failure. A swift and simple process has been proposed for Startups to wind-up operations to encourage entrepreneurs to experiment with new and innovative ideas, without having the fear of facing a complex and time-consuming exit process where their capital remains blocked. 6.Taxation Benefits to Start-Ups include income tax exemption for 3 years, tax exemption on capital gains and tax exemption on investments above fair market value. The income tax exemption for 3 years will be available subject to non-distribution of dividend by the Startup. Tax exemption on capital gains during the year will be available if such capital gains are invested in the Fund of Funds recognized by the Government. In addition, existing capital gain tax exemption for investment in newly formed manufacturing MSMEs by individuals shall be extended to all Startups. Apart from the above, various initiatives for the benefit of start-ups are being put into place which include Credit Guarantee Fund for Startups, Bio-incubators, Seed Fund and Equity Funding to foster and facilitate bio-entrepreneurship, providing Funding Support through a Fund of Funds with a Corpus of INR 10,000 crore, setting up of 7 new Research Parks, launch of Atal Innovation Mission (AIM) with Self-Employment and Talent Utilization (SETU) Program, launching innovation focused programs for students, building Innovation Centres at National Institutes, organizing Startup Fests at national and international level and an Annual Incubator Grand Challenge.

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