Formal proposal to DIPP; likely to be part of broader change in rules for start-ups
New Delhi, May 10:
Bio-technology firms are likely to soon get a relaxation of an additional three years in the eligibility criteria for being recognised as start-ups.
The Department of Bio-technology (DBT) has sent a formal proposal to the Department of Industrial Policy and Promotion (DIPP) stating that the requirement of registration of entities not prior to five years should be extended to eight years for bio-tech firms as their gestation period is more than other sectors.
“This seems to be acceptable to DIPP and there may be changes in the rules soon,” a government official told BusinessLine.
The change in the duration criteria for bio-tech start-ups is likely to be a part of the overall changes in the definition of start-ups that the DIPP is planning to bring about.
“The DIPP is planning some relaxation in the general definition of start-ups. Changing the duration for bio-tech start-ups may be part of the overall package,” the official added.
The current definition stipulates that a start-up means an entity incorporated or registered in India not prior to five years and not having a turnover in excess of ₹25 crore in any preceding financial year. The third criteria is not of innovation.
“Bio-tech is the only sector that would have specific changes in the start-up eligibility criteria. No other sector at present would get a special dispensation. However, if there are changes in the overall definition, it would be applicable to all,” the official said.
Status quo on tax sops
The DIPP will also not bring about any changes in the eligibility criteria for tax incentives. At present eligible start-ups can make use of their three-year tax holiday in a block of seven years.
“Tax holiday falls in the domain of the Finance Ministry. Although the DIPP has recommended an increased period of tax holiday for start-ups, the final decision has to be the Finance Ministry’s,” the official said.
Apart from tax sops, start-ups, meeting the five-year duration criteria, are eligible for several other incentives. Start-ups falling under the list of 36 “white” category industries get exemption from a number of environmental laws and labour law relaxations.
To give a leg up to start-ups, public procurement norms for micro and small enterprises have been eased.
The Department of Expenditure has also notified that all Central Ministries/Departments may relax condition of prior experience and prior turnover in public procurement to all start-ups subject to their meeting quality and technical specifications.
(This article was published on May 10, 2017)
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