Union Budget 2016-17, Keypoints for Startups

In continuation to our previous blog on what the government has in bag for the startups this blog will take you through what the budget has which can help you make your startup successful.


With so many startups coming up now and then, the government has now realized that how significantly it can drive our social and economic growth of the nation. This has resulted into coming up with initiatives likes Digital India, Make in India, and Start Up India, Stand Up India.
In the Union Budget 2016-2017 though it has emphasized on different key areas like Agriculture, Rural Development and Infrastructure etc. but it didn’t stand up to the hopes of the entrepreneurs There is uncertainty whether union budget 2016-2017 would truly help India to startup and stand up?

Let’s start with what the government had in for the startups

According to the government notification, an entity will be identified as a startup.

  • A time upto five years from the date of incorporation.
  • The turnover has to be less than 25 crore in the last five financial years.
  • It is working towards innovation, development, deployment, and commercialization of new products, processes, or services driven by technology or intellectual property.

Compliance Regime based on Self-Certification

  • Compliance pertaining to 6 labour & 3 environmental laws will be allowed to be self-certified through the Startup mobile app.
  • No inspections will be carried out under labour laws for a 3 year period.
  • Startups classified as White Category as defined by the Central Pollution Control Board will be allowed self-certification under environmental laws, with only random checks proposed.

Relaxed Norms of Public Procurement for Startups

In order to provide an equal platform to Startups (in the manufacturing sector) vis-à-vis the experienced entrepreneurs/companies in public procurement, Government shall exempt Startups(in the manufacturing sector) from the criteria of “prior experience/turnover” without any relaxation in quality standards or technical parameters. The Startups will also have to demonstrate requisite capability to execute the project as per the requirements and should have their own manufacturing facility in India.

Funding Support through a Fund of Funds

Corpus of INR 10,000 crore: Initial corpus of INR 2,500 crore and a total corpus of INR 10,000 crore over a period 4years (i.e. INR 2,500 crore per year).

“Fund of Funds”: The Fund will be in the nature of Fund of Funds, which means that it will not invest directly into Startups, but shall participate in the capital of SEBI registered Venture Funds.

Credit Guarantee Fund for Startups

Credit Guarantee Fund would help flow of Venture Debt from the formal Banking System.

Corpus of INR 500 crore per year for the next four years: In order to encourage Banks and other Lenders to provide Venture Debts to Startups, Credit guarantee mechanism through National Credit Guarantee Trust Company (NCGTC)/SIDBI is being envisaged with a budgetary Corpus of INR 500 crore per year for the next four years.

Tax Exemption on Capital Gains

The Union Budget 2016-17 gave effect to the proposal made under the Action Plan with tax exemption regard capital gains as follows:

  • Long term capital gains tax exemption: New Section 54EE inserted to provide long term capital gains tax exemption if capital gains proceeds are invested by an eligible tax payer in units of specified fund to be notified by the Central Government, subject to conditions. The maximum investment allowed upto INR 50 lakh.
  • Budget proposes to amend Section 54GB to provide long term capital gains tax exemption arising on account of transfer of a residential property if such capital gains are invested in an eligible startup by way of subscription of share subject to the tax payer holds more than 50% shares and utilizes monies to purchase new asset. Further, the Budget proposes to amend the expression “new asset” to include computers or computer software in case of technology driven startups.

Tax Exemption to Startups for 3 years

The Union Budget 2016-17 gave effect to the proposal made under the Action Plan with regard to tax exemption to Startups for 3 years as follows:

New Section80-IAC inserted in the Income Tax Act, 1961 to provide 100% deduction of the profits and gains derived by an eligible startup from a business involving innovation development, deployment or commercialization of new products, processes or services driven by technology or intellectual property, for 3 consecutive years out of 5 years beginning from the year of incorporation. The said benefit is available to an eligible startup setup before April 2019. However, MAT will apply.

Tax Exemption on Investments above Fair Market Value

To encourage seed-capital investment in Startups
Investments made by incubators in Startups proposed to be insulated from the rigors of Section 56(2)(viib) of the Income-tax Act, 1961. Any consideration received by Startups for issuance of shares over FMV to incubators, not to be taxed in the hands of the Startup.

Startup India Hub: The govt. would create a single point of contact for the entire Startup ecosystem and enable knowledge exchange and access to funding.

Rolling-out of Mobile App and Portal

The App shall be made available from April 01, 2016 on all leading mobile/smart devices’ platforms to provide the following services:

  • Registering Startups with relevant agencies of the Government
  • Tracking the status of the registration application and anytime downloading of the registration certificate.
  • Filing for compliances
  • Collaborating with various Startup ecosystem partners
  • Applying for various schemes being undertaken under the Startup India Action Plan

Legal Support & Fast-tracking Patent Examination

Startup Intellectual Property Protection (SIPP) scheme will be introduced on a pilot basis for a one year period to facilitate filing of Patents, Trademarks and Designs. The scheme would include:

  • Fast-tracking patent application.
  • Setting up a panel of “Facilitators” who will advise on different Intellectual Property Rights (“IPR”)

Are bate of 80% on patent filing fees vis-à-vis other companies is proposed.

This was a quick synopsis which is useful for the startups or those who are planning to startup. Incase, you seek any further clarity or recommendations on your startup, feel free to write to us at, info@gapeseedconsulting.com

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Start Up India Stand Up India Scheme

Now that you have been following our posts for so long, we would like to inform you about the
latest schemes regarding Start-Up India initiated by our government. This information might be of some use to you… On 5th April PM Modi officially launched one of the schemes in Noida. The official portal has been set up. Now it has become even easier for you to get detailed information regarding the Start up India plan. The portal was made live on April 1 2016. You can find all the information regarding the enrolment into the scheme which includes the online application forms, how to apply for loan etc. To simply know the working just navigate to the “Action plan” on the portal. For all latest notifications, you can navigate to “Notification” Section. A pdf file containing the list of incubators can be downloaded by interested applicants. For List of SEBI Registered funds, you can Visit HERE. If you have any queries regarding the “Start-up India Scheme” you can make use of the official Contact Us Page.

The whole world witnessed the launch of an ambitious programme in India on 16th January 2016.
The launch event took place in Vigyan Bhawan, New Delhi. Many of you still might not be clear about the goal, highlights and features of Start-up India programme but through this article you can find all the available information regarding the same. So if you have queries like – What is Start Up India Stand Up India Scheme ? Who can Apply ? How to Apply ? Application Form downloads etc, read the given information for the answers.

The economy of any country depends on its countrymen. Larger the number of employed or working
people, better be the economy. The Indian government has realized that Indians have great
potential when it comes to ideas; all they need is a promising opportunity or maybe a kickstart. Many people dream of starting up their own business, but due to financial or lack of opportunity they are unable to do so; hence Indian govt in the leadership of Mr. Narendra Modi has decided to offer a gift as a nation wise program- “Start Up India”.

Mr. Narendra Modi in his speech acknowledged that Indians have ideas and capability, all the need is a little push.

“Start Up India” is a revolutionary scheme that has been started to help the people who wish to start their own business. These people have ideas and capability. The government decided to give them support to make sure they can implement their ideas and grow. Success of this scheme will eventually make India, a better economy and a strong nation.

Start Up India Scheme – From Job Seekers to Job Creators

Technology is evolving with a pace faster than ever. This has given birth to various new businesses like E-commerce, internet marketing etc. giving a great scope of development in such areas. Those who plan to start new business are eligible to apply. Gapeseed Consulting knows that setting up a business has its own constraints – forming a company, taking approvals, taking care of legal compliances and registration etc. It isn’t a cakewalk for others but it is definitely easy for our clients. We will walk you through all the steps required for your Start-up.

During his speech at the event, Mr. Modi said that they are trying to make the youth Job Creators, rather than Job Seekers. He also said that one’s mindset should not be towards earning money in the initial phase, it should be rather on grabbing and using the opportunities.

Start Up India Stand Up India Scheme – Action Plan in Detail and How Gapeseed Consulting can do it for you.

  • E- registration has to be done. The application forms for start-up India are made available in
    April 2016.
  • A self-certification system has been launched.
  • A dedicated web portal and mobile app will be developed.
  • Arrangement of self-certificate based compliance.
  • No inspection during the first 3 years.
  • 80 percent reduction in the application fee of start-up patent.
  • Easy exit policy.
  • Inclusion of Credit Guarantee Fund.
  • Relaxation in Income Tax for first three year.
  • Special Arrangement for Female applicants.
  • Introduction of Atal Innovation Mission: Innovation courses will be started for the students.

As per the sources, the online application forms will be launched this month in April 2016. Interested applicants need to provide the required details in the application form. We will help you review you application so as it doesn’t get rejected.

For further queries and to know more about the Start-up India initiative, you can drop us a line here or feel free to send in an email to info@gapeseedconsulting.com

Gapeseed Consulting will be more than happy to help you setting up your own business.

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Now that you have an understanding about the launch procedure and also in ascertaining the best
suitable option for your start-up idea. This post will help you understand the procedure for Formation/Registration/Incorporation of Private and Public Company in India. Also Detailed Documents required for the same can be found here.

Whether you are just starting a business or incorporating a business already in existence, it is helpful to know and understand the formation and ongoing requirements each state places on corporations and limited liability companies. Incorporation / Formation of company involve a number of steps. We have tried to simplify the procedure to the maximum extent possible in the following steps

Step 1: Digital Signature

The basic step to company incorporation is to get DSC made of all directors. The Information
Technology Act, 2000 provides for use of Digital Signatures on the documents submitted in
electronic form in order to ensure the security and authenticity of the documents filed electronically. This is the only secure and authentic way that a document can be submitted electronically. As such, all filings done by the companies under MCA21 e-Governance programme are required to be filed with the use of Digital Signatures by the person authorised to sign the documents. To know the names of Certification Agency (CA) from where DSC can be acquired refer to our Free Guide.

Step 2: Acquire Director Identification Number

INCOME TAX PAN IS MANDATORY, so before applying of DIN a person must have his PAN number.
Details on PAN and DIN must be same. Step by step process to be followed by the applicant can be found in our resource section.

Step 3: Register DSC

Third step is to register DSC of the person authorized to sign E-forms on MCA21 or if you want us to do it for you drop us a line here.

Step 4: Apply for Reservation of Name [S.4(4)]

As per section 4(4) of Companies Act, 2013 read with rule 9 of Companies Incorporation Rules, 2014, application is to be made to registrar for reservation of name. 6 names can be proposed after checking its availability at MCA21 and as per guidelines given in the said rules and the procedures & documents required to be attached to INC – 1 are also available in the resource section.

Step 5: Drafting and Printing of Memorandum and Articles of Association

A public company limited by shares may adopt all or any of the regulations contained in model
articles of association registered along with its memorandum of association. The memorandum and articles shall be in conformity with the provisions of Section 4 and 5 of the Companies Act 2013. Read more here.

Step 6: Filing of Company Incorporation form – eform INC 7, DIR 12 & INC 22

As per Rule-12 of Companies (Incorporation) Rules, 2014, application for incorporation of a private and Public company, with the Registrar, within whose jurisdiction the registered office of the company is proposed to be situated, shall be filed in Form no. INC 7 [Rule 12 to 18] along with Form no. INC.22 for situation of registered office of the Company, (as the case selected in form no. INC 7) and DIR -12. There is a list of documents to be filled for Filing of company incorporation form get in touch with us to know it all.

Step 7: Filing of Commencement of Business – eform INC 21

On registration, a company cannot commence business or exercise any borrowing powers until it
files a declaration by directors in Form INC – 21 to the effect that every subscriber to the
memorandum has paid the value of the shares agreed to be taken by them as specified in section

E-form INC.21 is required to be filed with concerned Registrar of Companies for obtaining approval for commencement of Business and exercise of borrowing powers. This E-form is required to be filed by all companies incorporated under Companies Act 2013.

To know about the Procedure for commencement of Business under Companies Act, 2013 check out
our resources.

We hope that this post helped in understanding the procedures and documentations requirement
for your start-up. In case if you have any query about our startup series or services that we offer, please send in an email to info@gapeseedconsulting.com

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Basics For Incorporating A Startup

Now that you have understood the basics of CFO Services for Startups and the Payroll Services and the advantages of payroll for startups, our blog 3 in the series is all about Incorporating a startup, the options and categorization as sanctioned by the Ministry of Corporate Affairs.

To help you understand the requirements, following are the types of Incorporation as laid down by the Ministry of Corporate Affairs and other government authorities in some cases. Anyone who is interested in Incorporating a Startup can choose to launch business from the following categories:

1. One person Company

Anyone can incorporate “one person company” as a corporate body. He or she is only one entitled shareholder and Director of the company. The pre-conditions for one person company include:

  • Shareholder and Director Must be citizen or resident in India
  • Only One Director at a time
  • Nominee for shareholder is must

If you are planning of incorporating a startup which is home run, family run or service oriented you can probably begin with one person company and once you get established you can think of expansion.

2. Private Limited Company

A private limited company is the one with two directors and two shareholders. This is the basic requisite to incorporate private limited company. The maximum number of members in a private limited company can be 200. Company cannot invite general public to subscribe its shares or debentures. A private limited company can

  • Register with MCA as body corporate
  • Business governed by board of directors
  • Limited liability of members
  • Can not accept deposit from Public

People incorporating a startup which involves product, delivery and revolves around mass consumption or even which involves a number of stakeholders involved from the beginning should go for private limited company. This adds credibility to your idea at the launch stage itself.

3. Limited Liability Partnership (LLP)

LLP is a corporate structure that combines the flexibility of a partnership and the advantage of limited liability. Owing to flexibility in structure and operation, it would be useful for small and medium enterprises, in general and for the enterprises in service sector professionals.

  • It is body corporate and legal entity separate from its partners
  • Limited liability of partner.
  • Minimum two partners
  • On LLP, the Partnership Act 1932 not applicable.

There are pros and cons attached but entrepreneurs who are in the process of incorporating a startup which involves further licensing and compliances with other government authorities opt for LLPs. This is mostly a preferred option for startups entering the BFSI sector.

How we can help as an Agency for Setting Up a Business in India

Gapeseed Consulting Pvt Ltd is a financial services company with a team of experts coming from the Accounting and Legal backgrounds. Startups usually have reservations with the set of services, registration protocols etc and they find it complex to execute. We are here to simplify business functions and thereby multiplying the possibilities.

Our set of services include, Incorporation, Accounting, Tax and Company Law compliance, consulting, drafting agreements, Payroll and CFO Services.

Financial Services for Startups

The challenge to startups is not just to manage and grow business, it is also about managing in the right way. Entrepreneurs need advice on regular basis so that all compliances are met right from the day of incorporation of business.
We at Gapeseed Consulting provide virtual CFO Services to support your business. We understand that Startups usually do not hire a senior Chartered Accountant or Finance Professional at initial stage because it is very difficult situation for entrepreneur and Senior Financial Professional to do full time job in Startup. Therefore Virtual CFO Services is win-win situation for both.

Virtual CFO or Interim CFO Services in Delhi from Gapeseed Consulting can offer the follow-ing solutions:

  • Business Plan
  • Investor Relations
  • Financial Analytics
  • Budgeting and forecasting.
  • Cash Flow Management
  • Board & Management Reporting
  • Accounting Team Search
  • Transaction Accounting

Gapeseed Consulting has also launched Financial Services Startup Packages to make it more suitable for the startup requisites.

Allied Services

One of our startup client who will be soon celebrating their first anniversary felt dramatically low at a point when they realized about the compliances and regular taxation norms. Apparently those were nor considered at the planning stage and hence they felt the pressure to perform as per law & guidelines.

Since we had helped them with the Registration process, they asked for our help and Gapeseed Consulting readily deputed our in-house chartered accountant Mr.Jain as the Interim CFO to manage the Liquor Import Compliances for Incorporating a Business in India while setting up a business.

Some of our basic allied services include the management of compliance, taxation and other procedures that include:

  • Tax Deducted at Source- TDS is to be deducted by company at the time of booking or making payment exceeding prescribed limits. TDS to be deposited every month before 7th day of next month. TDS return is to be filed quarterly before 15th of each quarter.
  • Service Tax- Presently Service tax rate is 14%. Service Tax is to be deposited before 6th day of every month by company and before 6th of every quarter in case of individuals. Return is to be filed half yearly.
  • Advance Tax- Advance tax is to be calculated every quarter and to be deposited by company before due date. It is payable before 15th June, 15th Sep, 15th Dec and 15th March.
  • Income Tax Return- Income Tax Return is to be filed annually after accounts are adopted by Board and Audited by Chartered Accountant” – we provide help to startup prepare complete accounts so that auditor can audit without any problem. We provide all information, details required for audit.
  • Transaction structuring/ Opinion – Our experts give opinion on transaction structuring on any matter of accounting, taxation, debt or equity.
  • MCA Filings- Returns to be filed with MCA for shifting of registered office, change in directors, increase in share capital, filing of Board and EGM/AGM Resolutions.
  • RBI matters for filing FCGPR, or any other matter.
  • Drafting Shareholders Agreement and Debenture Agreement for Private Limited Companies.
  • Drafting of contracts, patent and trad mark registration and other services

We hope that this post helped in understanding the launch procedure and also in ascertaining the best suitable option for your startup idea. Our next post will be around the documentation that is required to complete the registration process for a startup or new business.

In case of any query pertaining to startup series or services that we offer, please send in an email to info@gapeseedconsulting.com

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Payroll Services for Startups

Our love for startups is forever increasing. And with our experience of working with them, we have realized that, Startups are natural rule breakers you got to come out of that comfort zone if you want to be the next big thing in the industry.
But there is one area where you wouldn’t want to mess around with the rules and that is payroll and HR. To avoid any legal and financial litigation you must comply with payroll and HR laws. Some of your actions might drive you out of the business as well. Keeping this in mind we offer Payroll services.

Like other business strategy and planning, payroll services for startups need to be taken seriously and keeping our client in mind the following are the important consideration on the basis of which we provide our services.

1. Convenience

Payroll services for Startups should not be a problem. It should be a cake walk that’s easy to do and one that can be done on any computer or mobile device. To achieve these tasks we make sure that our clients aren’t confined to their office or required to phone in hours manually every time they want to run payroll. Having the ability and the technology to run payroll from anywhere in fraction of minutes is something that we focus on to provide our services to our clients.

stration and will also manage it for you with the shared admin rights so that you can keep a tap on how Gapeseed Consulting is managing the Payroll Services for Startups.

2. Set Up

Gone are the days of paper-based payroll system, move on to a more advanced paperless system it would not require an immense learning from your side or big task, time-consuming training sessions. The transition should be smooth, quick, and easy. The software should be simple, straightforward, and well, user friendly to use.

We will provide you the demonstration and will also manage it for you with the shared admin rights so that you can keep a tap on how Gapeseed Consulting is managing the Payroll Services for Startups.

3. Cost Advantage

For many small business owners, cost cutting is a major thing, the payroll services they choose is often based on one thing – cost. But, when they get their monthly invoice, the amount owed can be significantly more than what they expected to pay. Unfortunately, hidden fees are common in this industry, but luckily not all providers “follow the rules.” A payroll provider’s services and pricing structure should be completely transparent so you know exactly what your invoice is going to be based on how many employees you have and the services you select and we assure you to give a transparent service. As we understand that Payroll Services for Startups are managed as they are having small teams and optimism resources.

4. Service Options

Many a times payroll providers just offer few payroll services, where as we offer a whole host of services designed so as to make your job easier. These services include

  • Payroll Accounting,
  • Attendance Register (Controls),
  • Online employee access to payment records,
  • Direct deposit,
  • Wage garnishments,
  • Easy CTC calculations,
  • Compliances,
  • Manage Employee Information Efficiently,
  • Define the emoluments, deductions, leave etc.,

Other Payroll Services for Startups include, Generate Pay-Slip at the convenience of a click, Generate and Manage the Payroll Processes according to the Salary Structure assigned to the employee, Generate all the Reports related to employee, attendance/leave, payroll etc., Manage your own Security.

5. Partners & Integration

You have to stay away from payroll providers who are not willing to partner and integrate with other HR and accounting systems. When a payroll system is easily matched with other types of accounting services, you own a great flexibility, more control, and better results. Similarly, it is important for us to understand small business needs in order to provide the most complete payroll package possible.

In order to achieve these goals, the government has simplified the business registration process as well as the rules that govern the process. Now, entrepreneurs can start a company in India easily. Even, simple licensing application can be done through self-certification or third part certification system. With the integrated online portal and less paperwork system, entrepreneurs do not have to worry about the administration burden and are able to focus more on running the companies. With initiatives like Make in India, Startups have ocean of opportunity and with such a situation Gapeseed Consulting can be a perfect choice for your business to outsource the payroll services.

To know more about the Payroll Services at Gapeseed Consulting, please connect or write to info@gapeseedconsulting.com

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