Startup India is a flagship initiative of the Government of India, intended to build a strong ecosystem that is conducive for the growth of startup businesses, drive sustainable economic growth, and generate large-scale employment opportunities. The Government through this initiative aims to empower Startups to grow through innovation and design.
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START-UP: India: Benefits qua IT/Government Scheme/Loans
1. START-UP: India: Benefits qua IT/Government
Scheme/Loans
CA NITIN PATHAK
President , ISACA Chapter Ahmedabad
26th FEB, 2021
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2. Introduction:
Startup India is a flagship initiative of the Government of
India, intended to build a strong ecosystem that is
conducive for the growth of startup businesses, to drive
sustainable economic growth and generate large scale
employment opportunities. The Government through
this initiative aims to empower startups to grow through
innovation and design.
The 19-Point Startup India Action Plan envisages several
incubation centers, easier patent filing, tax exemptions,
ease of setting-up of business, a INR 10,000 Crore corpus
fund, and a faster exit mechanism, among others.
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3. START-UP PILLAR:
The Action Plan is based on the following three pillars:
Simplification and Handholding
Funding Support and Incentives
Industry-Academia Partnership and Incubation
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4. ELIGIBILITY:
An entity shall be considered as a ‘Startup’ –
(i) Up to Ten years from the date of its
incorporation/registration,
(ii) If its turnover for any of the financial years has
not exceeded Rupees 100 Crores, and
(iii) It is working towards innovation, development,
deployment or commercialization of new
products, processes or services driven by
technology or intellectual property;
Provided that any such entity formed by splitting up
or reconstruction of a business already in existence
shall not be considered a ‘startup’.
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5. OBJECTIVES:
To boost up/promote start-ups
Core objective to generate maximum employment
Encourage people who have potential to innovative and
start their own business
Be a Job creator
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6. Forms for Setup:
1. Firstly, the company to be formed must be a Private Limited company
or a Limited liability partnership firm.
2. Secondly, the firms should have obtained approval from the
Department of Industrial Policy and Promotion (https://dipp.gov.in)
3. Thirdly, it must have a recommendation letter by an incubation.
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7. Key incentives for startups:
1. Self Certification: Labor laws:
Allowed self certification of compliances with certain labor laws and
environment laws so as to reduce the regulatory burden.
Further in case of the labor laws, no inspection will be conducted for
initial period of 3 years.
The labor laws shall include:
a. Other Constructions Workers’ (Regulation of Employment & Conditions of
Service) Act, 1996
b. The Inter-State Migrant Workmen (Regulation of Employment & Conditions of
Service) Act, 1979
c. The Payment of Gratuity Act, 1972
d. The Contract Labor (Regulation and Abolition) Act, 1970
e. The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
f. The Employees’ State Insurance Act, 1948
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8. Key incentives for startups:
2. Faster exit for Startups:
In terms of the Insolvency and Bankruptcy Code 2016,
Startups with simple debt structures or those meeting 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 fast track basis.
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9. Key incentives for startups:
3. Income Tax Benefits:
Profits shall be exempted from income tax under Section 80-IAC for a
period of 3 years out of 7 initial 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.
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10. Key incentives for startups:
4. Patent application and IPR protection:
Startup India provides high-quality intellectual
property services and resources to help startups protect
and commercialize their IPRs. This includes:
- Fast tracking of startup application,
- Providing 80% rebate in filing of patents as
compared to other companies,
- Providing 50% rebate in filing of trademarks as
compared to other companies,
- A Panel of facilitators to help in filing of IP
applications and Government support to bear
facilitation costs.
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11. Key incentives for startups:
5. Public Procurement Norms:
Public procurement refers exemption from requirement of
Earnest Money Deposit in government tenders.
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15. Financing Routes:
Following are the ways for financing the start ups:
EXTERNAL SOURCE INTERNAL SOURCE
Seed Capital Personal Financing
Angel Investors Personal Credit Lines
Crowd Sourcing Peer To Peer Lending
Venture Capital Vendor Financing
Private Equity Purchase Order Financing
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16. Government Subsidies:
1. Venture Capital Scheme:
Venture Capital Assistance is financial support in the form of an interest free
loan provided by Small Farmers’ Agri-Business Consortium (SFAC) to
qualifying projects to meet shortfall in the capital requirement for
implementation of the project.
BENEFITS:
Help in assisting agripreneurs to make investments in setting up
agribusiness projects through financial participation
Provides financial support for preparation of bankable Detailed Project
Reports (DPRs) through Project Development Facility (PDF).
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17. Government Subsidies:
2. Support for International Patent Protection in Electronics and &
Information Technology (SIP-EIT)
SIP-EIT is a scheme to provide financial support to MSMEs and
Technology Startup units for international patent filing to encourage
innovation and recognize the value and capabilities of global IP
along with capturing growth opportunities in ICTE sector.
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18. Government Subsidies:
3. Stand-Up India for Financing SC/ST and/or Women Entrepreneurs:
Stand Up India Scheme facilitate bank loans between 10 lakh
and 1 crore to atleast one scheduled caste (SC) or Scheduled Tribe,
borrower and atleast one women per bank branch for setting up a
greenfield enterprise. This enterprise may be in manufacturing, services or
the trading sector. In case of non-individual enterprises at least 51% of the
shareholding and controlling stake should be held by either an SC/ST or
Woman entrepreneur.
Eligibility:
SC/ST and/or women entrepreneur; above 18 years of age.
Loans under the scheme is available for only greenfield project.
Greenfield signifies, in this context, the first time venture of the
beneficiary in the manufacturing or services or trading sector.
In case of non-individual enterprises, 51% of the shareholding and
controlling stakes should be held by either SC/ST and/or Women
Entrepreneur.
Borrower should not be in default to any bank or financial
institution.
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19. Government Subsidies:
4. Single Point Registration Scheme:
The Government is the single largest buyer of a variety of goods. With a
view to increase the share of purchases from the small-scale sector, the
Government Stores Purchase Programme was launched in 1955-56. NSIC
registers Micro & small Enterprises (MSEs) under Single Point Registration
scheme (SPRS) for participation in Government Purchases.
Benefits:
Free of Cost Tender Info
Exemption from EMD(Earnest Money Deposit)
Advantage in Tender Participation
Procurement from Micro & small Enterprises (MSEs)
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20. Government Subsidies:
5. ExtraMural Research or Core Research Grant:
Extramural Research (EMR) funding scheme of SERB to academic
institution, research laboratories and other R&D organizations to carry
out basic research in all frontier areas of Science and Engineering is in
limelight for more than four decades since from the inception of SERC.
This scheme encourages emerging and eminent scientist in field of
science and engineering for individual centric competitive mode of
research funding. Since the scheme provides core research support to
the active researchers, the existing name Extramural Research (EMR) has
been renamed as Core Research Grant (CRG).
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21. Government Subsidies:
6. High Risk-High Reward Research:
High Risk and High Reward Research is a scheme supporting and
inviting new proposals and ideas expected to have a paradigm shifting
influence on the Science and Technology.
Eligibility:
Applicant should be an Indian citizen residing in India.
The applicant(s) must hold a regular academic/research position in a
recognized institution.
The proposals can be submitted by an individual or by a team of
investigators. Proposals submitted by a team of investigators must identify
a Principal Investigator, who will spearhead the research objectives and
administer the grant.
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