Let’s begin our journey with new business era of tax breaks and mega fund announced by PM Modi on 16 January, 2016 at New Delhi “START UP INDIA”. Vision is to Open Doors for New and Innovative Ideas. The 19-point Action Plan came with the promise that the role of the government will be of a facilitator and not more than that. Entrepreneurs will become free from complicated compliance requirements.
Meaning of Start up
- Start Up is an entity incorporated or registered in India less than 5 years ago, with an annual turnover upto Rs. 25 Crores in any preceding financial year.
- The entity has to work towards innovation, development, deployment or commercialisation of new products, processes or services driven by technology or intellectual property.
Tax Incentives for Start Ups
- Entities incorporated between April 2016 and March 2019 will be given Income tax holiday for a period of three years. This will encourage young entrepreneurs to begin their journey in business.
- 10000 Crores fund will be given for these start ups. These funds will participate in SEBI registered venture funds and will come indirectly.
- Capital gain tax will also be exempted if they invest in the funds recognised by the government. Main objective is to promote investments by mobilising capital arising from sale of capital assets.
- 2500 Cr. Credit Guarantee fund (Rs. 500 Cr. per year for 5 years) will also be given through the channels of Venture Debt from formal banking system.
- Start Up India Hub will be formed to facilitate single point of contact.
- Tax rules will be simplified for investments above fair value.
RED TAPISM WILL BE DONE AWAY….
- All the compliances will be self certified. Compliance costs will be reduced and regulations will be simple for a layman to follow.
- Mobile App for one day start up. This app will help in formation of an entity within 24 hours of applying. It will be a great move if a company is formed in a day in a simplified way.
Instead of complicated 20 number of pages, there will be only one page form for registration that can be easily filled up. App will facilitate interaction with government and regulatory agencies for all business needs and information exchange among various stakeholders.
- Patents pendency to be brought down to US levels in 18 months. Costs of patent registration will be much lower for start ups. Processing for patents approval will speed up with fee cut of almost 80%. Similarly, trademark pendency will be brought to zero in about a year.
- No inspection for initial three years. That means start ups will be allowed to self certify through a start up mobile app with 9 labour and environment laws.
- Norms for public procurement will also be relaxed for start ups.
- Not only Entry, but Exit too will be easy. Procedures will be simplified for quick and easy exit of failure entities.
The Initiatives announced by PM are welcome by each one of us. Tax breaks are really very encouraging. Red Tapism will be done away. License Raj will be abolished.
It’s the young entrepreneurs innovative minds that will a big boost to the economy as a whole. Now wait and watch how our dreams come true !!
(Author Details- CA Neha Gupta, B.Com, ACA, AIR (Final) 36, LNG & Associates, Chartered Accountants, Email: firstname.lastname@example.org)