Government of India expands the definition of what constitutes a startup, to increase their flow to seven years from 5 years now. This would involve relaxing the norms for tax benefits along with employment generation potential such as to facilitate job creation and entrepreneurship.
Tweaking the definition of a startup, the Government stated that any business not older than 7 years will now be eligible to avail the benefits of Startup India Action plan. According to the previous year provisions, only companies older up to 5 years with a business turnover of not more than Rs 25 crore were qualified for the concessions under Startup India Action Plan.
The Startup India initiative was launched by the Modi government in 2016, with the intention of boosting entrepreneurship and innovation in India. In its release last week DIPP said, “These changes are an effort to ensure ease of starting up new businesses to promote the startup ecosystem and build a nation of job creators instead of job seekers.”
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While the overall age limit for any enterprise to be called a startup has increased from 5 to 7 years, in case of biotechnology firms the overall age limit has increased to 10 years from the date of incorporation. Taking into account the longer gestation period for companies in the sector, the government has eased norms for getting Income tax benefits available under the Startup India programme.
Also business can only be considered as a startup if it has a promising business model, with a fair amount of potential for wealth creation or employment generation. As constituted by the Department of Industrial Policy and Promotion (DIPP), a startup should attain a certificate of an eligible business from the Inter- Ministerial Board of Certification.
Companies incorporated after March 31, 2016 could avail of a three-year tax holiday in the first seven years of their existence, as a part of the incentives announced for upcoming firms. The definition’s scope has been broadened to include scalability of business models, with the potential for employment generation, Economic Times reports.
One of the main focuses for Startup India programme was to generate employment opportunities for the Indian youth. DIPP has recognized 798 applicants as startups but not given them the tax benefit.
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