{"id":1371,"date":"2016-03-25T12:45:11","date_gmt":"2016-03-25T12:45:11","guid":{"rendered":"https:\/\/indiabizforsale.wordpress.com\/?p=1371"},"modified":"2016-12-24T10:23:11","modified_gmt":"2016-12-24T10:23:11","slug":"budget-2016-impact-on-startups","status":"publish","type":"post","link":"https:\/\/www.indiabizforsale.com\/blog\/budget-2016-impact-on-startups\/","title":{"rendered":"Budget 2016: Impact on Startups"},"content":{"rendered":"<p style=\"text-align: justify;\">Startups were awaiting anxiously for Mr. Jaitley to come with bonanza for them. Few years have been happening for them and companies started by new breed of entrepreneurs\u00a0have attracted huge investment from domestic as well as foreign investors.<\/p>\n<p style=\"text-align: justify;\">Modi\u2019s emphasis on \u201cMake in India\u201d and \u201cStandup India\u201d had raised expectations to peak. Even the FM speech gives an impression of fresh blood infusion by offering various tax\u00a0sops to start-ups. FM mentions in his budget speech (Para 125) to assist Startups by allowing 100% deductions of profits in 3 out of 5 years of their start. However, let\u2019s have a\u00a0look at the fine print of various provisions of Finance Bill, 2016.<!--more--><\/p>\n<p style=\"text-align: justify;\"><strong>Startups have been defined by way of conditions<\/strong>:<br \/>\n 1. It has to be company incorporated on or after 01.04.2016. It is a known fact that incorporating Company involves high cost than other forms of businesses like\u00a0Proprietorship firm, Partnership firm or LLP. Even the regular compliance cost is much higher than other forms.<\/p>\n<p style=\"text-align: justify;\">2. The total turnover should be capped at Rs.25 Crores in any of the five years from incorporation. It appears to be misplaced provision as turnover is usually huge while\u00a0profit may or may not arise. For eg. Cab aggregator may have turnover of Rs.100 Crores but are in losses.<\/p>\n<p style=\"text-align: justify;\">3. After these financials restrains, Bill defines \u201celigible business\u201d of start-ups must involve innovation, development, deployment or commercialisation of new products,\u00a0processes or services driven by technology or intellectual property. Hence, companies have to first prove before an Inter-Ministerial Board of Certification(to be notified)\u00a0about their products or processes. This appears to be cog in wheel as products or process or service should be new is very hard to prove, also there is no definition of \u201cnew\u201d.\u00a0Further, intellectual property is nowhere defined leading to new round of litigation.<\/p>\n<p style=\"text-align: justify;\">Intellectual property generally means Patents, Trademarks, Copyrights, Designs and Geographical Indications in India. Indian Intellectual Property laws doesn\u2019t require\u00a0compulsory registration for all. For instance, Copyright doesn\u2019t require compulsory registration and law provides protection to author who can prove his creation to be oldest.<\/p>\n<p style=\"text-align: justify;\">Now, if the government is talking about Patents then their own Report says 98% of Patents granted in 2015 were more than 5 years old. Surprisingly, one patent was applied 19 years\u00a0back. So going by the record we can conclude that startup will wait for 5 years and by that time deduction under proposed Section 80-IAC will subside. After, seeing this apathy it\u00a0appears to be an eye wash.<\/p>\n<p style=\"text-align: justify;\">Secondly, if an individual or HUF also invests from sale of residential property in equity of such a startup company can claim benefit from capital gain which otherwise would be\u00a0pretty high.<\/p>\n<p style=\"text-align: justify;\">However, if this is unintended then the Finance Ministry should co-ordinate with Ministry of Commerce which oversees Intellectual Property in India and come out with\u00a0provisions which propagates start-ups at root and doesn\u2019t rot them.<\/p>\n<p style=\"text-align: justify;\"><strong>About Author<\/strong><br \/>\n Nipun Singhvi is a Corporate Lawyer who is a Chartered Accountant,\u00a0Company Secretary and holds Masters in Corporate Law. He is an avid\u00a0speaker at various professional forums, business associations and banks. He\u00a0is involved closely in start-up consultancy and has nurtured many SME to\u00a0grow.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Startups were awaiting anxiously for Mr. Jaitley to come with bonanza for them. Few years have been happening for them and companies started by new breed of entrepreneurs\u00a0have attracted huge investment from domestic as well as foreign investors. Modi\u2019s emphasis on \u201cMake in India\u201d and \u201cStandup India\u201d had raised expectations to peak. Even the FM&hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","footnotes":""},"categories":[78,69],"tags":[141,142],"featured_image_src":null,"author_info":{"info":["indiabizforsale"]},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Budget 2016: Impact on Startups - IndiaBizForSale<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.indiabizforsale.com\/blog\/budget-2016-impact-on-startups\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Budget 2016: Impact on Startups - IndiaBizForSale\" \/>\n<meta property=\"og:description\" content=\"Startups were awaiting anxiously for Mr. Jaitley to come with bonanza for them. 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