Monday 18 January 2016

Shot in the Arm for Startups in India, #StartupActionPlan: Incentives and Conditions

In the welcoming move by Modi led Government, the PM has declared following incentives and benefits for new Startups in India:
-A Fund to be created of Rs.10,000 crore for #StartupIndia
-Every Year a fund of Rs.2,500 crore to be given to Startups
-Startup India Hub will be created as a single point of contact and administration
- Patent application and its protection will be highest priority and 80% rebate on the cost of patent will be provided
-Organising Startup Fest for showcasing Innovation 
-Building Innovation Centres at National Institutes
-Promoting Startups in Biotechnology Sector  
-Annual Incubator Grand Challenge
-Faster Exit for Startups
-Credit Guarantee Fund for Startups   

  1. No Income tax on Profits of Startups for first 3 years
  2. No Capital Gains tax if self property invested in own Startup
  3. No Inspections from Government agencies for initial 3 years
  4. Self-certification compliances policy relating to Labour and Environmental Law   

From 1st April 2016 Registration process will begin for which a Mobile App is also developed

Conditions for taking benefits of Startup Scheme:

1. It must be an entity registered/incorporated as a:
a. Private Limited Company under the Companies Act, 2013; or
b. Registered Partnership firm under the Indian Partnership Act, 1932; or
c. Limited Liability Partnership under the Limited Liability Partnership Act, 2008.
2. Five years must not had elapsed from the date of incorporation/registration.
3. Annual turnover (as defined in the Companies Act, 2013) in any preceding financial year must not exceed Rs. 25 crores.
4. Startup must be working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property.
5. The Startup must aim to develop and commercialise:
a) a new product or service or process; or
b) a significantly improved existing product or service or process,  that will create or add value for customers or workflow.
6. The Startup must not merely be engaged in:
a. developing products or services or processes which do not have potential for commercialization; or 
b. undifferentiated products or services or processes; or 
c. products or services or processes with no or limited incremental value for customers or workflow
7. The Startup must not be formed by splitting up, or reconstruction, of a business already in existence.
8. The Startup has obtained certification from the Inter-Ministerial Board, setup by DIPP to validate the innovative nature of the business and
a. be supported by a recommendation (with regard to innovative nature of business), in a format specified by DIPP, from an Incubator established in a post-graduate college in India; or 
b. be supported by an incubator which is funded (in relation to the project) from GoI as part of any specified scheme to promote innovation; or 
c. be supported by a recommendation (with regard to innovative nature of business), in a format specified by DIPP, from an Incubator recognized by GoI; or 
d. be funded by an Incubation Fund/Angel Fund/ Private Equity Fund/ Accelerator/Angel Network duly registered with SEBI* that endorses innovative nature of the business; or 
e. be funded by GoI as part of any specified scheme to promote innovation; or 
f. have a patent granted by the Indian Patent and Trademark Office in areas affiliated with the nature of business being promoted. 
* DIPP may publish a ‘negative’ list of funds which are not eligible for this initiative.


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