Start-Up India is a flagship initiative of the Government of India, intended to build a strong eco-system for nurturing innovation and startups in the country, which will drive sustainable economic growth and generate large scale employment opportunities. The Government of India through this initiative aims to empower startups to grow through innovation and design.
At VAS Financial, we work with budding entrepreneurs in achieving their dreams by guiding them through various stages of their start-up journey. We believe in working with them as partners by advising them on company formation, availing DIPP recognition, vetting business plans, managing funding requirements and mentoring.
START-UP ACTION PLAN:
The Action Plan is divided across the following areas:
- Simplification and Handholding
- Compliance Regime based on Self-Certification – Regulatory formalities requiring compliance with various labour and environment laws are time consuming and difficult in nature. Often, new and small firms are unaware of nuances of the issues and can be subjected to intrusive action by regulatory agencies. In order to make compliance for Start-ups friendly and flexible, simplifications are required in the regulatory regime.Accordingly, the process of conducting inspections shall be made more meaningful and simple. Start-ups shall be allowed to self-certify compliance (through the Startup mobile app) with 9 labour and environment laws (refer below). In case of the labour laws, no inspections will be conducted for a period of 3 years.
- Start-up India Hub – Mobile App – Government of India will introduce a Mobile App to provide on-the-go accessibility for:
- Registering startups
- Filing of compliances
- Applying for various schemes
- Legal Support and Fast tracking Patent Examination at Lower Costs
- Funding Support and Incentives
- Fund of Funds with corpus of INR 10,000 crores – In order to provide funding support to Startups, Government will set up a fund with an initial corpus of INR 2,500 crore and a total corpus of INR 10,000 crore over a period 4 years (i.e. INR 2,500 crore per year) . The Fund will be in the nature of Fund of Funds, which means that it will not invest directly into Startups, but shall participate in the capital of SEBI registered Venture Funds.
- Tax Exemptions on Capital Gains – Due to their high risk nature, Startups are not able to attract investment in their initial stage. It is therefore important that suitable incentives are provided to investors for investing in the Startup ecosystem. With this objective, exemption shall be given to persons who have capital gains during the year, if they have invested such capital gains in the Fund of Funds recognized by the Government.
- Tax Exemption to Startups for 3 years – With a view to stimulate the development of Startups in India and provide them a competitive platform, it is imperative that the profits of Startup initiatives are exempted from income-tax for a period of 3 years. This fiscal exemption shall facilitate growth of business and meet the working capital requirements during the initial years of operations. The exemption shall be available subject to non-distribution of dividend by the Startup.
- Tax Exemptions on Investments above FMV – Under The Income Tax Act, 1961, where a Startup (company) receives any consideration for issue of shares which exceeds the Fair Market Value (FMV) of such shares, such excess consideration is taxable in the hands of recipient as Income from Other Sources.Currently, investment by venture capital funds in Startups is exempted from operations of this provision. The same shall be extended to investment made by incubators in the Startups.
- Industry-Academia Partnership and Incubation
- Organizing Startup Fests for Showcasing Innovation and Providing a Collaboration Platform
- Launch of Atal Innovation Mission (AIM) with Self-Employment and Talent Utilization (SETU) Program
- Harnessing Private Sector Expertise for Incubator Setup
- Building Innovation Centres at National Institutes