Startup India initiative – In line with the announcement of the Prime Minister Mr. Narendra Modi on Independence Day speech the Government formally launched an initiative for startup on 16th January 2016. The action plan was also released on the same date emphasizing the government action plan, schemes, incentives in form of tax exemption and a system of speedy grant of a patent. Following are the important announcements with respect to the startup India:
The emphasis is on self-certification by the business owners/ compliance officers/entrepreneurs/ directors of the company so that the startups are relieved of the regulatory burden. The self-certification is applied in cases of regulatory requirement of laws dealing with payment of gratuity, contract labor, employment provident fund and activities pertaining to water and air pollution etc.
To enable knowledge exchange, free flow of information and access to funds government is creating a single point contact for entire startup ecosystem which shall be known as startup India hub. The startup India hub was operationalized on first April 2016 to resolve queries and hand holding support for startups so far more than 12000 queries were received by the hub through phone, email and twitter.
At present, the grant of the patent takes on an average 4 years. In some cases, the patent is granted after more than 20 years which discourages invention. Hence, the Government shall be taking steps to fastrack the examination of a patent application.IPR is emerging as a strategic business tool for any business organization to enhance industrial competitiveness. Startups, with limited resources and manpower, can sustain in this highly competitive market only through continuous growth and development-oriented inventions. For this, it is equally crucial that they protect their IPRs. Subsequent to an announcement made by prime minister while launching the startup initiative, a scheme for Startup Intellectual Property Protection (SIPP) was launched with a vision to protect and promote IPR of startups and thus encouraging innovation and creativity among them. Recently Government announced 80% rebate in the Government filing fee for filing the patent application for startups.
In current scenario the capital gain accrued to the venture capital funds out of their investment in startups are exempt in terms of the provision of income tax act, however, the same is taxable if the investment is made by the incubators. The Government recognizing the role of incubators toward the startups have also extended the exemption on capital gain to the investment made by the incubators in the startups.