Start up India

C.A. THAKKAR & ASSOCIATES
Email: cacathakkar@gmail.com Web:
www.cathakkar.in
What if your idea is not just an idea?
What if it sees light?
What if it’s really born?
What if you can get someone to believe in it?
And help you nurture it?And help you nurture it?
What if you can set a clear path for it?
What if it can actually travel?
What if it grows and blooms?
What if the whole world embraces it?
What if your idea is not just an idea?
Email: cacathakkar@gmail.com Web: www.cathakkar.in

Action plan
Aimed at Promoting bank financing
Boost entrepreneurshipBoost entrepreneurship
Organized by DIIP

Startups would be allowed self certification
of compliances with certain labour laws and
environment laws so as to reduce the
regulatory burden. Further in case of the
labour laws, no inspections will be conductedlabour laws, no inspections will be conducted
for initial period of 3 years.
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

Patent applications of Startups shall be fast
tracked for examination and disposal, so
that they can realize the value of their IPR
at the earliest possible. A Panel of
facilitators will be empanelled to assist infacilitators will be empanelled to assist in
filing of IP applications. The Government
shall bear the entire fees of the facilitators
and the Startup shall bear the cost of only
statutory fees. Further, Startups shall be
provided 80% rebate in filing of patents
visàvis other companies.
The Government of India shall provide mobile
app for:
A. Registering Startups with relevant agencies of
Government
B. Tracking the status of registration application
and downloading of the registration
certificate. C.A. THAKKAR & ASSOCIATES

C. Filing for compliances and obtaining
information on various clearances and
approval required.
D. Applying for various schemes being
undertaken under the Startup India Action
Plan.Plan.
The Mobile App shall be made available
from April 1, 2016 on all leading mobile/
smart devices' platforms.
In terms of the Insolvency and
Bankruptcy Bill 2015, Startups with
simple debt structures or those
meeting such criteria as may bemeeting such criteria as may be
specified may be wound up within a
period of 90 days from making of an
application for winding up on a fast
track basis.

Exemption shall be given in respect of
a capital gain which is invested in the
Exemption shall be given in respect of
a capital gain which is invested in the
Startup ecosystem. This will increase
the funds available to various VCs
(Venture Capital Funds ) / AIFs
(Alternative Investment Funds ) for
investment in Startups.

Profits shall be exempted from income tax for aProfits shall be exempted from income tax for a
period of 3 years.
The exemption shall be available subject to no
distribution of dividend by the Startup. A
Startup shall be eligible for tax benefits only
after it has obtained certification from the
Inter-Ministerial Board, setup for such purpose.
Consideration received by a
Startups for issuing shares at a
price higher than its Fair Market
Value would not be taxable asValue would not be taxable as
income from other Sources in the
hands of recipient under section
56(2)(viib) of the Incometax Act.

single point of contact for the entire Startup
ecosystem and enable knowledge exchange and
access to funding. The "Startup India Hub" will
be a key stakeholder in this vibrant ecosystem
and will:and will:
A. Work in a hub and spoke model and collaborate
with Central & State Governments of Indian
and foreign VCs, angel networks, banks,
incubators, legal partners, consultants,
universities and R&D institutions.
B. Assist Startups through their lifecycle with
specific focus on important aspects like
obtaining financing,
feasibility testing,feasibility testing,
business structuring advisory,
enhancement of marketing skills,
technology commercialization
and management evaluation.

C. Organize mentorship programs in collaboration
with
Government organizations,
Incubation centers,
Educational institutionsEducational institutions
& Private organizations to aspire foster innovation.
Startup India Hub will be guide, friend and a
mentor for the people who has courage to enter in
environment of risk.
Typically whenever a tender is floated by a
Government entity or by a PSU, a very often
eligibility condition specifies either "prior
experience/turnover". Such a stipulation
prohibits/impedes Startups from participating in
such tenders. 1st April 2015 Central Government,such tenders. 1st April 2015 Central Government,
State Government and PSUs have to mandatorily
procure at least 20% from the Micro Small and
Medium Enterprise (MSME). In order to promote
Startups, Government shall exempt Startups (in the
manufacturing sector) from the criteria of "prior
experience/turnover" for filing of public tenders.

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 a
period 4 years (i.e. Rs. 2,500 crore per
year).year).
The Fund will be in the nature of fund
of funds, which means that it will not
invest directly into Startups, but shall
participate in the capital of SEBI
registered Venture Funds.
Features of the Fund of Funds are below:
The Fund of Funds shall be managed by a
Board with private professionals drawn
from industry bodies, academia, and
successful Startupssuccessful Startups
Life Insurance Corporation (LIC) shall be
a co-investor in the Fund of Funds

The Fund of Funds shall contribute to a
maximum of 50% of the stated daughter fund
size. In order to be able to receive the
contribution, the daughter fund should have
already raised the balance 50% or more of the
stated fund size as the case maybe. The Fund
of Funds shall have representation on the
of Funds shall have representation on the
governance structure/ board of the venture
fund based on the contribution made.
The Fund shall ensure support to a broad mix of
sectors such as manufacturing, agriculture,
health, education, etc.
Grameen Capital
Car Dekho
Paytm
Swasth IndiaSwasth India
Urban ladder
Blue Stone
Snap deal
Altaero Energies

Debt funding to Startups is also
perceived as high risk area and to
encourage Banks and other Lenders
to provide Venture Debts to
Startups, Credit guaranteeStartups, Credit guarantee
mechanism through National Credit
Guarantee Trust Company (NCGTC)/
SIDBI is being envisaged with a
budgetary Corpus of INR 500 crore
per year for the next four years.
Government has introduce a new section and
amended some old sections under Income Tax
Act to promote Start Ups.
New sections:
Section 80-IAC
Section 54EE
Section 54EE
Section 115BA
Section 115BBF
Section 80-IBA
Section 56(2)(viib)

Government has amended some old sections
under Income Tax Act to promote Start Ups.
Amended sections:
Section 54GBSection 54GB
Section 80JJAA
A new section 80-IAC is inserted.
Benefit:
Deduction up to 100% of the profits for three years out of
five consecutive years.
Eligibility:
Eligible startup i.e. person involving in a business of
innovation, development, deployment or
innovation, development, deployment or
commercialization of new products, processes or services
driven by technology or intellectual property.
Condition:
The deduction shall be available only to start-ups set-up
before 01.04.2019.

Amendment in section 54GB
Benefit:
Long-term capital gains arising from transfer of
residential property of individual or HUF shall not
be charged to tax.
be charged to tax.
Eligibility:
To take the benefit of this section capital gain has
to be invested in shares of an eligible start-up.
Condition:
Individual or HUF holds more than 50% shares of
such start-up; and
Such investment is utilized by the start-up to
Such investment is utilized by the start-up to
purchase new assets before due date of filing of
return of investor.

A new section 54EE is inserted.
Benefit:
Exemption up to Rs. 50 lakhs for long-term capital
gain.
Eligibility:
Capital gains has to be invested in units of funds
set-up by Government to promote start-ups.
Condition:
Exemption shall be reversed if amount invested is
withdrawn within 3 years from date of making
investment in specified funds.
If assessee takes any loan and/or advance against
such investment then he is deemed to have
transferred such specified asset on the date on
which such loan or advance is taken.

A new section 115BA is inserted.
Benefit:
Lower tax rate @25% (plus surcharge and cess).
w.e.f: 1st march 2016
Eligibility:
Manufacturing companies incorporated on or after 1.3.2016.
Manufacturing companies incorporated on or after 1.3.2016.
Condition:
The option shall be available to companies which do not
claim profit linked or investment linked deductions and do
not avail of investment allowance and accelerated
depreciation.
A new section 115BBF is inserted.
Benefit:
Any income by way of royalty received in respect of
a patent developed and registered in India shall be
taxable at the rate of ten per cent (plus applicable
surcharge and cess) on gross basis. This benefit
applies to the new patents that would be registered
surcharge and cess) on gross basis. This benefit
applies to the new patents that would be registered
and also to the existing patents.
Condition:
Benefits are available to the person resident in India,
who is the true and first inventor of the patent.

Substitution of new section for
section 80JJAA
Benefit:
30% of emoluments paid to employees would be
allowed as a deduction provided emolument per
employee per month is less than or equal to Rs. 25,000.
employee per month is less than or equal to Rs. 25,000.
Eligibility:
all assesses who are required to get their accounts
audited and has to be a start up.
Condition:
No deduction is available where Government is
paying for EPF to employees.
It is further proposed to reduce the minimum
number of days of employment in a financial year
from 300 days to 240 days and also the condition
of 10% increase in number of employees every
of 10% increase in number of employees every
year is proposed to be withdrawn.
an employee’s emoluments has to be less than or
equal to twenty-five thousand rupees per month.

A new section 80-IBA is inserted:
Benefit:
Hundred per cent deduction of the profits of an assessee
developing and building affordable housing projects.
w.e.f: 1st june 2016
w.e.f: 1 june 2016
Eligibility:
Housing project is approved by the competent authority
after 1st june 2016 and before the 31st March, 2019
Condition:
The project is completed within a period of 3 years
from the date of approval;
The project is on a plot of land measuring not less
than 1,000 sq. meters where the project is within 25
km from the municipal limits of four metros and
in any other area, it is measuring not less than
2000 sq. meters where the size of the residential
2000 sq. meters where the size of the residential
unit in the said areas is not more than thirty sq.
meters and sixty sq. meters, respectively.
Where residential unit is allotted to an individual,
no such unit shall be allotted to him or any
member of his family, etc.

Section 56(2)(viib)
Benefit:
Consideration received by a Startups for issuing
shares at a price higher than its Fair Market Value
would not be taxable as income from other Sources
in the hands of recipient
Earlier section 56(2)(viib)
Earlier section 56(2)(viib)
where a company, not being a company in which the
public are substantially interested, receives, in any
previous year, from any person being a resident, any
consideration for issue of shares that exceeds the
face value of such shares, the aggregate
consideration received for such shares as exceeds
the fair market value of the shares:
Provided that this clause shall not apply where
the consideration for issue of shares is
received—
(i) by a venture capital undertaking from a
venture capital company or a venture capital
fund; or
fund; or
(ii) by a company from a class or classes of
persons as may be notified by the Central
Government in this behalf.

(1) Where at any time, a company having a share capital
proposes to increase its subscribed capital by the issue of
further shares, such shares shall be offered—
(c) to any persons, if it is authorised by a special
resolution, whether or not those persons include the
persons referred to in clause (a) or clause (b), either forpersons referred to in clause (a) or clause (b), either for
cash or for a consideration other than cash, if the price of
such shares is determined by the valuation report of a
registered valuer subject to such conditions as may be
prescribed.

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