Friday, March 11, 2016

Kick to Startup India initiative

The economy of any country depends on quality of its people. Larger the number of employed people, better will be the economy. The importance of promoting entrepreneurs has been recognised by the Indian Government. 'Startup India, Stand up India' is one such campaign for creating a conducive environment for ‪‎startups in India. It aims to boost entrepreneurship, encourage startups with job creation and building an economy driven by technology.

For empowering startups to grow through innovation and technology, the Indian Government announced startup India: Action Plan [plan] which addresses all aspects of the startup eco-system. The plan proposes a 19 point action list which inter-alia includes compliance regime based on self-certification, startup India hub, rollout of mobile app and portal, legal support and fast-tracking patent examination at lower cost, faster exits, funding support through a 'funds of funds' with a corpus of INR 10,000 crore, etc. It also proposes to provide tax exemptions on profits, capital gains, and investment above fair market value subject to fulfillment of certain conditions. The objective to give these exemptions is to promote investments into/growth of startups and address the working capital requirements.

Recently, the Government has issued a notification wherein the term 'startup' has been defined and the procedure for its recognition and obtaining tax benefits has been prescribed.

The ‪‎Union Budget 2016 is well aligned with the startup India campaign. In line with the plan, the Budget proposes the following initiatives for startups:

■ Amendment in the Companies Act, 2013 to improve enabling environment for startups and ensure registrations of companies in one day.

■ Hub to support Scheduled Caste [SC] and Scheduled Tribe [ST] entrepreneurs. Further, INR 500 crore has been earmarked for SC/ST and women entrepreneurs under the Startup India scheme.
■ Entrepreneurship education and training to be provided through Massive Open Online Courses so that they can connect to mentors and credit markets.

With a view to provide an impetus to start-ups and facilitate their growth in the initial phase of their business, in line with the plan and notification issued by the Government, effective from assessment year 2017-18, the following tax exemptions and incentives have also been proposed:

■ Section 80-IAC to be inserted to provide 100% deduction of profits derived by a eligible startup engaged in eligible business, subject to fulfilment of certain conditions. The proposed deduction will be available at the option of the assessee for any 3 consecutive assessment years out of 5 years beginning from the year in which the eligible start-up is incorporated. Eligible start-up means a company which is incorporated on or after 1 April 2016 but before 1 April 2019; the total turnover of its business does not exceed INR 25 crore in any of the financial years beginning on or after 1 April 2016 and ending on 31 March 2021; and it holds a certificate of eligible business from the Inter-Ministerial Board of Certification as notified in the Official Gazette by the Central Government. Eligible business for the purpose of claiming the above tax deduction means a business which involves innovation, development, deployment or commercialisation of new products, processes or services driven by technology or intellectual property.

Click here to Know More at http://bit.ly/kicktostartupindiainitiative


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