Admin[Source: economictimes.indiatimes.com]
Companies eyeing benefits under the Startup India programme will soon have to declare upfront how many jobs they will create in order to qualify as the government moves to make employment generation the guiding principle for all its major programmes.
"We will soon notify the new definition for startups, which goes beyond innovation," a senior government official said. Innovation is currently the main criterion for startups to qualify for benefits such as tax holidays and fast-track patent filing under Startup India.
To qualify as a startup under the new definition, an entity would have to declare its job creation target and meet certain financial standards besides having a certain level of innovation in its product or service. "We will do our own scrutiny at the time of examination of applications for giving the tax benefits," the official said.
When PM Narendra Modi launched the Startup India initiative in January 2016, one of its main thrusts was to create employment opportunities for the youth, but it was not included as a mandatory requirement.
The initiative has not yet taken off in a big way, as only 10 startups have been approved for availing of the tax benefit by an inter-ministerial board.
DIPP has recognised 798 applications as startups but not given them the tax benefit. Companies incorporated after March 31, 2016, could avail of a three-year tax holiday in the first seven years of their existence under the Startup India initiative.
To relax the norms for availing of the scheme, the Department of Industrial Policy and Promotion (DIPP) has decided to do away with the certification each startup was supposed to get from a government-recognised incubator on its innovation capabilities to be eligible for Startup India benefits.
DIPP has also sought to increase the maximum age for classifying a biotechnology or a medical devices firm as a startup to 8-10 years from the current five years. This has been suggested on the grounds that companies in these two sectors have a longer gestation period. Startups are expected to create 250,000 jobs in India by 2020, up from 80,000 now, according to a Nasscom report.
