In India 27,918 DPIIT Recognised STARTUPS, Get benefited under startup policy from funding to tax exemption, most of the startup are technology and Internet-based.
Start-ups have emerged as engines of growth for our economy. Over the past year, the Government has taken several measures to hand-hold them and support their growth.
Employee Stock Option Plan (ESOP)
Start-ups generally use Employee Stock Option Plan (ESOP) to attract and retain highly talented employees. ESOP is a significant component of compensation for these employees. Currently, ESOPs are taxable as perquisites at the time of exercise. This leads to cash-flow problem for the employees who do not sell the shares immediately and continue to hold the same for the long-term. In order to give a boost to the start-up ecosystem, In Budget2020 government proposes to ease the burden of taxation on the employees by deferring the tax payment by five years or till they leave the company or when they sell their shares, whichever is earliest.
Change in eligibility criteria of Startup
An eligible Start-up having turnover up to 25 crores is allowed a deduction of 100% of its profits for three consecutive assessment years out of seven years if the total turnover does not exceed 25 crore rupees. In order to extend this benefit to larger start-ups, Budget2020 government propose to increase the turnover limit from existing
25 crores to 100 crores. Moreover, considering the fact that in the initial years, a start-up may not have adequate profit to avail this deduction, Budget2020 government propose to extend the period of eligibility for claim of deduction from the existing 7 years to 10 years.
To focus on basic infrastructure, direct all infrastructure agencies of the government to involve youth-power in start-ups. They will help in rolling out value-added services in quality public infrastructure for citizens.
Is Your Company A Startup?Change in Budget 2020
- Company Age: Period of existence and operations should not be exceeding 10 years from the Date of Incorporation.
- Annual Turnover: Should have an annual turnover not exceeding Rs 100 crore for any of the financial years since its Incorporation.
Another step has been taken for Startup
- The government needs to expand the base for knowledge-driven enterprises. Intellectual property creation and protection will play an important role. Several measures are proposed in this regard, which will benefit the Start-ups.
- A digital platform would be promoted that would facilitate seamless application and capture of IPRs. Also, in an Institute of Excellence, a Centre would be established that would work on the complexity and innovation in the field of Intellectual Property.
- Knowledge Translation Clusters would be set up across different technology sectors including new and emerging areas.
- For designing, fabrication and validation of proof of concept, and further scaling up Technology Clusters, harbouring such test beds and small scale manufacturing facilities would be established.
Focus on Next Generation Technologies
Mapping of India’s genetic landscape is critical for next-generation medicine, agriculture and for biodiversity management. To support this development, we will initiate two new national level Science Schemes, to create a comprehensive database.
The government proposes to provide early life funding, including a seed fund to support ideation and development of early-stage Start-ups.
Quantum technology is opening up new frontiers in computing, communications, cybersecurity with wide-spread applications. It is expected that lots of commercial applications would emerge from theoretical constructs which are developing in this area.
Budget Provision in 2020 for Commerce and
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Government has actively started collaborating with startups for data-driven new-age management consulting firms on several business opportunities, especially in agriculture, citizen services, healthcare, and sanitation.
Startup Impact in Government Ecosystem:
- The Election Commission now displays real-time election results on mobile app.
- The Coffee Board uses technology solutions to automate coffee brewing patterns.
- The Andhra Pradesh government has secured digital land records of 1 lakh farmers.
- Governments in Andhra Pradesh, Madhya Pradesh, and Rajasthan are conducting Hackathons to crowdsource solutions in healthcare, sanitation, technology, and transportation.
- The Maharashtra government has set up diagnostic machines to monitor haemoglobin.
- The government is expected to welcome innovative startups in infrastructure and e-governance.
Know More about Startup eligibility