Prime Minister Narendra Modi announced a slew of tax sops and other incentives for encouraging startups in the country such as easier registration and clearances, fast exit options, self-cerification and rebate in patent filing fees.
He also announced a Rs 10,000 crore 'fund of funds' for providing funding support to startups over a period of four years.
The tax sops, greeted with loud applause from the startup founders gathered at Vigyan Bhawan on Saturday, include exemption of income tax on profits for the first three years of their operation. Modi also announced exemption of capital gains tax for investment in the 'fund of funds' for startups recognised by the government and also for investing in all startups.
"I am confident these announcements, in days to come, will give inspiration and opportunity to the youth and talent in our country, to do something new and valuable for the country and humanity," Modi said while announcing the action-plan for start-ups.
Modi promised a mobile app and portal, to be rolled out on April 1, that would serve as a single platform for startups for interacting with government and regulatory institutions.
Startups would also be provided legal support for filing patent applications free of cost and would have to pay only 20 per cent of the applicable patent application fee.
To encourage experimentation among startups, the government will provide credit guarantee through a National Credit Guarantee Trust Company being envisaged with a corpus of Rs 500 crore per year for the next four years.
A swift and simple process to help startups wind up their operations has also been proposed, which is a part of the Insolvency and Bankruptcy Bill 2015 tabled in Lok Sabha in December. "Rest of the problem you know," the PM said alluding to the Opposition holding it up. "Maybe all of you should go back and tweet in favour of its passage," he said to the amused audience.
To reduce regulatory burden, startups will be allowed to self-certify compliance with nine labour and environment laws. No inspections will be conducted for adherence to labour laws for three years.
The government has also proposed setting up of a 'start up India hub' to assist startups through their lifecycle with focus on obtaining financing, feasibility testing and enhancement of marketing skills.
Salient features of Start-up Action Plan announced by PM
Lower government involvement in business
Self certification to simplify registration of start-ups
No inspection for three years
Start-up India Hub will provide single point access, can also be done via mobile app
Patent fees for start-ups to be slashed by 80%
Rs 10,000 crore fund for start-ups on cards @ 2500 crore each each year for the first 4 years
Credit guaranteed fund for start-ups, with contribution of Rs 500 crore a year
Start-up profits not taxable for first three years
No Capital gains tax for start-ups
Will bring in Bankruptcy Bill in Parliament for faster winding up
Will bring in sector specific incubators
Special schemes for women entrepreneurs on cards