Compliance regime based on self certification
The objective of compliance regime based on self certification is to reduce the regulatory burden on startups. This self-certification will apply to laws like payment of gratuity, contract labour, employees provident fund, water and air pollution acts.
Startup India hub
A startup India hub will be created as a single point of contact for the entire startup ecosystem to enable knowledge exchange and access to funding.
Simplifying the startup process
A startup will be to able to set up by just filling up a short form through a mobile app and online portal. A mobile app will be launched on April 1 through which startups can be registered in a day. There will also be a portal for clearances, approvals and registrations.
The government is also working on a legal support for fast-tracking patent examination at lower costs. It will promote awareness and adoption of Intellectual Property Rights (IPRs) by startups and help them protect and commercialise IPRs.
Funds of funds with a corpus of Rs 10,000 crore
In order to provide funding support to startups, the government will set up a fund with an initial corpus of Rs 2,500 crore and a total corpus of Rs 10,000 crore over four years. The fund would be managed by private professionals drawn from the industry while LIC will be a co-investor in the fund. The credit guarantee fund for start-ups would help flow of venture debt from the banking system to start-ups by standing guarantee against risks.
Credit Guarantee Fund
A National Credit Guarantee Trust Company is being envisaged with a budgetary allocation of Rs 500 crore per year for the next four years.
Exemption from Capital Gains Tax
Currently, investments by venture capital funds in startups are exempt from this law. Now, the same is being extended to investments made by incubators in startups.
Tax exemption for startups
Income tax exemption to startups announced for three years, to promote growth of startups, profit of startups, set up after April 1, 2016, shall be exempted from income-tax.
Tax exemption on investments above Fair Market Value
In line with the exemption available to venture capital funds to invest in startups above fair market value (FMV), investments made by incubators above FMV shall also be exempted.
Launch of Atal Innovation Mission
Atal Innovation Mission started to give an impetus to innovation and encourage the talent among the people.
80 per cent rebate on filing patent applications by startups
To enable startups to reduce costs in their crucial formative years, startups shall be provided an 80% rebate in filing patents vis-a-vis other companies.
Relaxed norms of public procurement for startups
Faster exits for startups
To make it easier for startups to exit, provision for fast-tracking closure of businesses has been included in ‘The insolvency and Bankruptcy Bill 2015’. Startups with simple debt structures may be wound up within a period of 90 days from making of an application for winding up on a fast-track basis.
Tax exemption on capital gains –
Exemptions shall be given in case capital gains are invested in the fund of funds recognized by the government.
In addition, existing capital gain tax exemption for investment in newly formed MSMEs by individuals shall be extended to all startups. If somebody invests the money received by selling his/her own property in his/her startup, he/she shall be given exemption from capital gain tax.
Credit guarantee fund for startups –
To catalyze entrepreneurship through credit to innovators across all sections of society, credit guarantee mechanism through National Credit Guarantee Trust Company/SIDBI shall be rolled out with a budgetary corpus of INR 500 cr per year for the next four years.
Funding support through fund of funds with a corpus of INR 10000 Cr –
To provide funding support for development and growth of innovation driven enterprises, Government will set up a fund with an initial corpus of INR 2500 cr and a total corpus of INR 10000 cr over a period of 4 years.
Panel of facilitators to provide legal support and assist in filing of patent application –
Facilitators shall provide assistance for startups in filing and disposal of patent applications related to patents, trademarks and design under relevant Acts.
Government shall bear the entire fees of the facilitators for any number of patents, trademarks or designs that a startup may file.
Starting a startup in 1 day on mobile app –
To serve as the single platform for information exchange and interacting with government and regulatory institutions, a mobile app shall be available from April 2016. This will ensure that startup companies/partnerships are registered in one day.
Startups will also be able to file for various clearances/approvals/registrations through the mobile app and portal
Startup India Hub- Single point contact for the entire startup ecosystem. This will be a setup and a friend, mentor and guide for startups through their entire journey.
Relaxed norms of public procurement for startups –
To provide an equal platform to startups vis-a-vis the experienced startups/ companies in public procurement, startups (in the manufacturing sector) shall be exempted from the criteria of prior ‘experience/turnover’ without any relaxation in quality standards or technical paramsaters.
Fast track mechanisms of startup patent applications –
In order to allow startups to realize the value of their IPRs at the earliest possible. Patent applications of the startups shall be fast tracked for examination and disposal.