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Startups: Dawn of Entrepreneurship

  • May 18, 2021
  • Posted by: TeamSCK
  • Category: Economics
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Startups: Dawn of Entrepreneurship

In this new age of “Aatmnirbhar Bharat”, the government of India is leaving no stone unturned to make India a self-reliant and a self- subsistent nation. With regard to the fact that more than 65% of the Indian population is below the age of 35, there is a lot of potential talent to be explored and nurtured. To harvest the same and create an ecosystem of entrepreneurship and innovation, “Startup India Initiative” was launched on 16th January, 2016.

Startup India Initiative aims at inviting individuals to start business ventures by providing relaxations. This Initiative is known for its key pillars of support for startups, namely –

Simplification and Handholding
 Incubation & Industry – Academia Partnership
Funding and Incentives

ELIGIBILITY CRITERIA 

  1. Entity’s Age – It should be in existence for less than 7 years from the Date of Incorporation. (10 years in case of biotechnology startup).
  2. Type of Entity – The entity should be incorporated as a Private Limited Company, a Registered Partnership Firm, or a Limited Liability Partnership. 
  3. Limit on turnover – The Annual Turnover of the entity should not exceed Rs. 25 crores in any financial year since its incorporation.
  4. Original Entity – The existence of the entity should not be as a result of splitting up or restructuring of an existing business.
  5. Innovation and Scalability – Entity’s primary focus should be on innovation and development of new products, processes or services and/or has a business model having potential to create wealth and employment.
  6. Certification – Inter-Ministerial certification is a must for this purpose.

THE BENEFITS

  1. 100% Tax Rebate, i.e. no tax on profit earned for 3 consecutive assessment years out of 7 years beginning from the year in which eligible startup was incorporated. Startup incorporated between 1st April 2016 to 31st March 2022 are eligible for the same, subject to some additional conditions.
  2. Exemption from “Angel Tax” which is levied when the capital raised by unlisted companies by issuing of shares and the share price is in excess of the fair market value of the shares sold.
  3. The set off and carry forward of losses is allowed even if the shareholding pattern is changed. The condition of 51% of voting right remaining unchanged has been relaxed for eligible startups.
  4. The eligible startups can also claim tax exemption on long term capital gains subject to conditions as may be prescribed. 
  5. Easy facilitation and protection of intellectual property rights to ensure minimal legal trouble is faced by the startups through agencies at minimal cost.
  6. Self-certification of documents leading to relaxation in compliance under 3 environmental laws and 6 labour laws is leading to smooth registration and conduct of business.
  7. In case of things going downhill, easy exit strategy and procedures is available for startups.

These benefits, among many others, create a win-win situation at an individual and country level. With a little wit and lot of hard work the Startup India Initiative can be a game changer in the field of employment, innovation and self-reliance.

Disclaimer – The information/content on this page is for general information and educational purpose only. Nothing shall be construed as any legal advice or practice of law. We are not responsible for any action taken by the user based upon any information given in this document.

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