STARTUP INDIA

BUDGET ANNOUNCEMENTS
No tax on income from Startups:
A 100% deduction of profits for 3 out of 5 years for start-ups, during April, 2016 to March 2019,
with certain riders will be available. Similarly, to promote innovation, a special patent regime
with a 10% rate of tax on income from worldwide the exploitation of patents developed and
registered in India was proposed.
Capital Gains and ARCs:
Reduction in period of LTCG from three to two years to get benefits of long term Capital Gain
regime in case of unlisted companies. Allowing non-banking financial companies deduction to
the extent of 5% of its income in respect of provision for bad and doubtful debts. Also,
determination of residency of foreign company on the basis of place of effective management
(POEM) will be deferred by one year and reiterated commitment to implement General Anti
Avoidance Rules (GAARs).
To get more investment in Asset Reconstruction Companies (ARCs), which play a very
important role in resolution of bad debts, a complete pass through income-tax to securitization
trusts including trusts of ARCs has been proposed. The income will be taxed in the hands of the
investors instead of the trust.
1-day incorporation:
1-day incorporation via a mobile app and web portal via simple application form. The process of
registration shall be real time and the certificate of recognition would be issued immediately
upon successful submission of the application.
MUDRA scheme:
The Pradhan Mantri Mudra Yojna was launched for the benefit of the bottom of the pyramid
entrepreneurs. Banks and NBFCs have reported an amount of Rs 1 lakh crore covering 2.5 crore
borrowers have been made this year. For the coming year Jaitley says the plan is to increase the
target to Rs. 1 8 lakh crore.

Presumptive taxation scheme:

Under the presumptive taxation scheme under Section 44AD of the Income tax Act, the limit of
turnover or gross receipts has been raised to Rs. 2 crore from the exiting Rs. 1 crore rupees to
benefit about 33 lakh small business people. It frees a large number of such assesses in the
MSME category from the burden of maintaining detailed books of account and getting audit
done.
The presumptive taxation scheme is to be now being extended to professionals with gross
receipts up to Rs. 50 lakh with the presumption of profit being 50% of the gross receipts.
Corporate tax for Small Companies:
The corporate income tax rate for the next financial year of relatively small enterprises i.e
companies with turnover not exceeding Rs. 5 crore (in the financial year ending March 2015) is
proposed to be lowered to 29 % plus surcharge and cess. The new manufacturing companies
which are incorporated on or after 1.3.2016 are proposed to be given an option to be taxed at
25% plus surcharge and cess provided they do not claim profit linked or investment linked
deductions and do not avail of investment allowance and accelerated depreciation.
Service Tax exemption:
Service tax on services provided under Deen Dayal Upadhyay Grameen Kaushalya Yojana and
services provided by Assessing Bodies empanelled by Ministry of Skill Development and
Entrepreneurship are proposed to be exempted.
Rs 500 cr to support SC/ST, women entrepreneurs (Stand Up India Scheme):
Stand-Up India Scheme. To promote entrepreneurship among the Scheduled Castes/Scheduled
Tribes and women with loans in the range of Rs 10 lakh to Rs 100 lakh.
Employee Provident Fund
The Government will pay EPF contribution (employers contribution) of 8.33 per cent for all
new employees for first three years, which shall save straight 12 per cent cost for the startup
companies and provide security benefits to the employees.

STARTUP INDIA PORTAL AND MOBILE APPLICATION, LAUNCHED,

1ST APRIL 2016
Key Features Information Availability: The portal and mobile app provide up-to- date information on
various notifications/ circulars issued by various Government ministries/ departments, towards
creation of a conducive ecosystem for Startups. The portal and mobile app provide information
regarding incubators and funding agencies recognized for the purpose of recommending Startups
(as part of Startup recognition application). A comprehensive list of FAQs is also available to
help Startups, Incubators and Funding Agencies use the portal and mobile app more effectively.
Startup India Hub: The Startup India Hub, which has been established within Invest India, will
be a single point of contact for the entire Startup ecosystem which would enable exchange of
knowledge. The Hub will work in a hub and spoke model with Governments, VCs, Angel Funds,
Incubators, Mentors, etc. It will assist Startups through their lifecycle, on all aspects, such as
providing mentorship, incubator facilities, IPR support, funding etc. The Hub will be operational
from 10:00 AM to 5:30 PM on working days and can be reached via the toll free number:
1800115565 or the email ID: dipp-startups@nic.in
Application for Startup Recognition: Entities that fulfil the criteria as per the definition of
Startup and are incorporated/ registered in India, can obtain recognition as a Startup to avail
various benefits listed in the Startup India Action Plan. The process of recognition is simple and
user friendly and involves a single page application form that a user can fill either through a web
interface or through mobile app. Formats of the recommendation/ support letters that need to be
attached as part of the application form have been published on the portal and mobile app.

Real Time Startup Recognition: A real time recognition certificate is provided to Startups on

completion of the application process. A digital version of the final certificate of recognition is
available for download, through the portal and mobile app. A request for certificate of eligibility
for tax exemptions from Inter-ministerial Board will be made simultaneously by selection of a
simple option.
Verification of Recognition Certificate: The certificate of recognition is verifiable through the
portal and mobile app by entering the Startup Recognition/ Certificate Number.
Approval of Inter-Ministerial Board: DIPP has also setup an Inter-Ministerial Board to verify
the eligibility of Startups opting to avail Tax and IPR related benefits and to provide a certificate
of eligibility to innovative Startups.
IPR Portal : The portal also seeks to increase awareness and build sensitivity towards IP, among
stakeholders in the small and medium enterprises sector, academia and researchers.

OTHER KEY DEVELOPMENTS

Increase in Budget for funding Startups by 5 times.

Deen Dayal Upadhyay Swaniyojan Yojana Rural version of Startup India, aimed
towards providing the basic skill sets required for self employment in various fields and
thereafter we would provide credit linkages, incubation centers wherever needed. Backed

by MUDRA Bank loans.

100% FDI in e-commerce - 100% foreign direct investment (FDI) in online retail of
goods and services under the marketplace model. Capping of sales to 25% from a

single vendor to regulate inventory based model.

Introduction of the Bankruptcy bill in the parliament as exit option to start-up
within 90 days - The Insolvency and Bankruptcy Code 2015 attempts to recognize that
businesses can fail for genuine reasons as opposed to those defaulters who misused the
insufficiency in the present regime. A deal can be signed, sealed and delivered in just over
four months time.