DIPP in touch with Corporate Affairs Ministry to update start-up rules

Start-up India Action Plan announced tax exemptions for start-ups, incubators, research parks

The Commerce and Industry Ministry is in touch with the Ministry of Corporate Affairs (MCA) to update the rules for start-ups in line with the government's Start-up India action plan.

The Department of Industrial Policy and Promotion (DIPP), which is the overseeing authority on industrial rules regarding start-ups in the country, had written to the MCA to update company rules and regulations in line with key decisions taken with regards to start-ups.

The Start-up India Action plan, launched back in January 2016 incorporates the DIPP's rules regarding such companies. In line with its focus on ease of doing business, the norms allow for easy incorporation and dissolution of start-ups.

"We are in continuous touch with the Corporate Affairs Ministry over gradual updation of its rules to reflect our own," a DIPP official said.

On this note, a media report on Thursday, had pointed out that DIPP had written to the MCA requesting that start-ups be notified as 'fast track firms'. This will allow them to wind up their business within 90 days of applying to do so.

The official quoted above said this was part of a regular interaction between the two ministries. He added this was done so that necessary laws administered by the MCA are updated.

Expediting the company winding up process in India would require the notification of Sections 304-323 of the Companies Act, 2013, relating to voluntary winding up. “The benefits of voluntary winding up operations involve no court supervision,” it added. 

Among other proposals, the Start-up India Action Plan announced tax exemptions for start-ups as well as more incubators and research parks.

However, on the much celebrated announcement of government funding for chosen start-ups, little progress has been made. 

One year after the fund was launched, SIDBI had managed to disburse only Rs 5.66 crore of the Rs 10,000 crore fund. The funds were to be invested in Sebi registered Alternative Investment Funds, four of which have been identified by SIDBI to be given Rs 110 crore.

Also, the budget had increased the period of profit­linked deductions available to start-ups to seven years from the current five years. Notably, this tax sop is only available to those start-ups which are recognised by the DIPP.