| Hi Folks |
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With the much awaited Budget round the corner, I know none of you will be interested in anything but taxes – especially if the income tax rates are down or tax slabs are up or new exemptions are created. I am not privy to any such scoops and so nothing much to expect other than wait for 29th Feb for the Finance Minister to present the Union Budget 2016-17. But yes, before the budget fever catches on and you are flooded with budget snippets, figures, statistics, analysis, interpretations et al, the most important announcement that has caught the attention of entrepreneurs is the definition of a ‘STARTUP’.Is it a different animal ? |
| Is it treated differently ? Is it pampered ? What it is and what it is not and how to get recognised / approved as a Startup eligible for tax exemptions has all been notified now by the Government. 143rd issue of Lexspeak carries this definition and also the highlights. Many of you are eager to know if you can claim some benefits, if you really are the innovative, privileged Startup animal. Scott Belsky said “It’s not about ideas. It’s about making ideas happen.” I bet Startup is all about this. I know how tough it is to make ideas happen ! |
| For once I will keep it short and allow you the mind space to soak in the budget analysis. Should you wish to refer to any of our older issues of LexSpeak, do visit our Resource Centre at sharadasc.com. |
| Warm regards
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| Further to the Startup India Action Plan released on 16th February, 2016, ‘startup’ has been defined and a notification issued prescribing the procedure for its recognition and obtaining tax benefits.
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- Upto 5 years from the date of its incorporation/registration
- If its turnover for any of the financial year has not exceeded Rs. 25 crore
- It is working towards innovation, development, deployment or commercialisation of new products, processes or services driven by technology or intellectual property.
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- Any entity formed by splitting up or reconstruction of a business already in existence shall not be considered as a startup.
- Entity means Private Limited Company / Partnership Firm / Limited Liability Partnership
- Turnover is as defined under Companies Act, 2013
- An entity is considered to be working towards innovation, development, deployment intellectual property if it aims to develop and commercialize:
- A new product or service or process, or
- A significantly improved existing product or service or process, that will create or add value for customers or workflow
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- In order to avail tax benefits a startup shall be required to obtain a certificate of an eligible business from the inter- ministerial board of certification consisting of:
- Joint Secretary, Department of Industrial Policy and Promotion (DIPP)
- Representative of Department of Science and Technology
- Representative of Department of Biotechnology
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- The process of recognition as a startup shall be through mobile app/portal of DIPP
- Startup will required to submit a simple application with any of following documents:
- Validation/recommendation (with regard to innovative nature of business) letter from an Incubator in a post-graduate Indian college or
- Validation/recommendation letter by incubator funded by Govt. of India or
- Validation/recommendation letter by incubator recognised by Govt. of India or
- A letter of funding of not less than 20% in equity by any incubation fund/angel fund/private equity fund/accelerator/angel network or
- Patent granted by Indian Patent and Trademark office related to business
- Once such application with relevant documentation is uploaded, a real time recognition number will be issued to the startup.
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| At the time of verification, if recognition is found to be obtained without uploading the document or uploading any other document or a forged document, the concerned applicant shall be liable to a fine which shall be 50% of paid up capital of the startup but shall not be less than Rs. 25,000. |
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| Highlights of the changes made by RBI vide Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Second Amendment) Regulations, 2016: |
- NRIs can open separate NRE account under portfolio investment scheme
- Manufacture defined
- Ownership and control definition modified
- Guidelines for establishment of Indian companies/ transfer of ownership or control of Indian companies, from resident Indian citizens to non-resident entities, in sectors under government approval route amended
- Complete list of sectors with sectoral caps for investment under approval route and automatic route in detailed which is aligned with the DIPP’s FDI Policy.
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