Taking a step ahead from the much-anticipated reforms announced at the 'Stand Up India Startup India' Programme, Mr. Arun Jaitley on Monday announced some pioneering initiatives to encourage entrepreneurs to start disruptive firms that will strengthen our country's economy. Although, the entire startup community is divided in its opinion about the real impact of these initiatives. We do feel that some of the key challenges were not addressed in this year's budget, like reforms in compliance & exit policy and moreover there were no further development or roadmap mentioned for the much-awaited GST implementation. Here are all the startup initiatives that were addressed in the union budget 2016.
1) Tax Holidays for startups and rebates
For the startups incorporated between April 2016 and March 2019 can now apply for 100 per cent income tax deduction on profits for the first three years from the time of inception. However, the minimum alternate tax will continue to be levied on such firms.
A long pending request of Angel Investors to rationalise capital gains tax on investments in startups has been accepted by the government. The capital gains have been exempted from taxation if these are invested in regulated/notified 'Funds of Funds'. Even the holding period for long-term capital gains tax exemption for unlisted firms has also been lowered to two years from the earlier three years.
A reduction of 29 per cent from 30 per cent corporate income tax rate has been granted for companies with a turnover under Rs. 5 Crore for the financial year end March 2015. A good news for tech startups and firms in the field of Artificial Intelligence and Robotics as FM Jaitley announced a 10 per cent tax rebate on earnings from global patent filings.
2) Funding galore for Women Entrepreneurs
The government has proposed a Rs 500 crore fund for women entrepreneurs and entrepreneurs from the scheduled caste/ scheduled tribe (SC/ST) community. As per FM Jaitley, this fund will encourage and benefit 2.5 lakh SC/ST entrepreneurs. Government will also partner with DICCI (Dalit Indian Chamber of Commerce and Industry) and many such organisations to set up entrepreneurial hubs for SC/ST entrepreneurs.
3) Minimum Government and Maximum businesses
Staying true to the promise of Minimum government and maximum governance the centre will be amending the Companies Act, 2013 so that startups registrations can happen in 24 hours/ One day. Hence, creating an enabling environment for startups and to eradicate red-tapism and cumbersome documentation work involved in setting up a company.
4) Education in Entrepreneurship
The centre has proposed to provide entrepreneurship education and training in 2200 colleges, 300 schools and 500 Government Institutes. Massive Open Online Courses (MOOC) ventures will be utilised to render training at 50 vocational training centres.
5) Legislative backing for Aadhar Platform.
This reform specifically was applauded by Vijay Sharma Founder & CEO of Paytm. The Aadhar bill will be introduced in the current session of the parliament which will help in facilitating accurate transfers of subsidies. Vijay feels legislative backing of such a great platform will unleash the platform's true potential.
6) The Digital Push
A digital repository will be created for all school/college leaving certificates, diplomas and awards. This can create monetisation opportunities digitisation ventures and big data startups.
