Commerce Ministry Proposes To Reduce Compliance Time For Startups
Commerce Ministry proposed cutting down compliance time to just one hour per month for startups to ease regulatory requirements.
The Commerce and Industry Ministry has proposed cutting down compliance time significantly to just one hour per month for startups as part of measures to ease regulatory requirements for budding entrepreneurs, an official said.
The proposal is a part of 'Startup India Vision 2024', prepared by the Department for Promotion of Industry and Internal Trade for the new government to promote the growth of budding entrepreneurs.
At present, startups comply with a plethora of requirements such as goods and services tax filings, tax returns and other local laws every month, the official said. Compliance to these processes takes a lot of time and cost. "Monthly compliance for startups needs to be reduced to one hour per month so that they can concentrate on their core work," the official said.
MicroGo LLP Founder Rachna Dave said, “Reducing the compliance time to one hour will be an extremely welcoming step giving startups enough time to focus on their core activity. It will also create a stronger startup support ecosystem in the country”.
MicroGo LLP is a Tamil Nadu-based startup that has received a patent for 'Tubelet' technology mainly used for water purification, sanitisation and sterilisation.
The vision document has suggested a total of 11 measures for easing regulatory burden to provide a business-friendly environment to startups.
The suggestions include setting up of a regulatory sandbox or innovation hub to help fintech startups; tax incentives for investments in ventures of budding entrepreneurs; reduction in GST rates on alternative investment fund management services; and amendment in income tax laws pertaining to sale of residential properties and carrying forward of losses.
Besides, the document has proposed taxation on employee stock ownership plans as startups use ESOPs as an alternative provision instead of cash salary to attract talented employees away from larger corporations. It also said a specialist team within banks or a separate private agency to assess startup loan applications are required to improve debt financing ecosystem for them.
The vision document aims at facilitating setting up of 50,000 new startups in the country by 2024 and creating 20 lakh direct and indirect employment opportunities.
The DPIIT, under the Commerce and Industry Ministry, which has prepared the document, has also suggested setting up of 500 new incubators and accelerators by 2024; 100 innovation zones in urban local bodies; deployment of entire corpus of Rs 10,000 crore fund of funds; and expanding CSR funding to incubators. The document will be presented to the new government for further action.
Startup India is the flagship initiative of the government, launched in January 2016, intends to build a strong ecosystem for the growth of startup businesses, to drive sustainable economic growth and generate employment opportunities. The Startup India action plan provides tax and other incentives. So far, as many as 18,711 startups have been recognised by the department.