Post on 08-Nov-2021
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ICSI-SOUTHERN INDIA REGIONAL COUNCIL
40th MANAGEMENT SKILLS ORIENTATION PROGRAMME
(MSOP)
24th JUNE 2019 to 10th JULY 2019
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PROJECT REPORT
ON
START UP INDIA
Project Date: 9th July 2019, Tuesday
Prepared and submitted by:
TEAM – B
NAMES REGISTRATION NUMBER
Ms. Thanmayi A.G 320004624/08/2012
Ms. Gayathri Devi M.S 340076921/05/2014
Mr. Sajith M 320494197/04/2009
Ms. Chaithanya B 350050678/02/2013
Mr. Satheesh Kumar S 320374008/11/2006
Ms. Kiruthika B 340058768/02/2014
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INDEX
Sl. No. CONTENT Page No.
Preface
Acknowledgement
1 Introduction 6
2 Eligibility for Start-Up Registration 11
3 How to Register 12
4 Benefits 16
5 Role of Government 19
6 Financing Methods 23
7 Successful Start-Up Stories in India 28
8 Success Story of UrbanClap 33
9 Challenges 40
10 Compliances 44
11 Role of Company Secretary 55
12 Conclusion 56
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PREFACE
This report is prepared as per the requirement of 40th Management Skill Orientation
Programme (MSOP) of Southern Regional Council (SIRC) – Chennai as prescribed by
the Institute of Company Secretaries of India.
The purpose of this report is to get well acquainted with what “Start-up India” actually
means.
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ACKNOWLEDGEMENT
It gives us immense pleasure to express our gratitude to the Institute of Company
Secretaries of India for giving us the opportunity to present our project on Start-Up
India.
We extend our sincere gratitude to our faculty of Institute and fellow professional
friends for their continuous support, encouragement, guidance, moral support and
healthy criticisms in developing the project.
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INTRODUCTION
India is changing and so are the aspirations of its 1.2 billion people. Our country, once
regarded as a third-world economy, is today the hub of billion-dollar firms and a hot
investment destination. This change is certainly not the result of a one-day effort and
no single person can take credit for bringing it. The change took about 68 years to
happen, facing challenges like corrupt governments, a weak economy, and low
purchasing power.
The software services companies brought about the first wave of change in the early
2000s when the demand for human resource in the IT sector was huge. But at that
time, the dream of opening a Start-Up was only for a rare breed of brave
entrepreneurs. The change really occurred when the recession hit the world in
2008-09.
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Now was the time for people to think different. And the cue came from Silicon Valley,
and its Start-Up culture. It is only possible in the IT sector for anybody to come up
with a brilliant new software solution or a fab looking site and instantly get rich. The
idea instantly caught the imagination of the young Indian. Moreover, the growth in
technology and the fast-growing demand for smartphones helped fuel the idea of
technology Start-Ups.
India is a young country with almost 65 per cent of the population in the age group
of 25-35 years. The trend of walking up the entrepreneurial path is steadily on the
increase. IT professionals are leaving their well-paid jobs in US and returning back to
India to launch start-ups. The placement trend is also towards start-ups rather than
big companies. We Indians of the new millennia are strong believers of pursuing our
own dreams rather than following the instructions of any foreign multinational.
Start-Up India Scheme
Start-up India Scheme is an initiative of the Indian government, the primary objective
of which is the promotion of start-ups, generation of employment, and wealth
creation. It was launched on the 16th of January, 2016 by Prime Minister Narendra
Modi at Vigyan Bhawan, New Delhi.
Objectives of the Scheme
• To boost up/promote start-up /Entrepreneurship
• To generate maximum employment
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• To encourage the people who have the potential to innovate and start their
own business.
• Making available funds support and incentives.
• Reducing the burden of tax, compliance & regulatory framework.
Features of the Scheme:
Just like the book from Jim Collins “Good To Great”, if the right people are
seated in the right seats of the bus, the start-up will eventually find its
direction towards success.
Forbes outlined that the businesses which are able to survive and succeed are the
ones that capture the qualities outlined below. These qualities are generally deeply
ingrained in the character of successful entrepreneurs. They are
Vision - A well-defined vision is a skill or gift that every company leader needs in
order to cross the finish line. It will be the major force behind an entrepreneur’s
success and will serve as a compass in tough times.
Speed- Getting things done in a quick manner is one of the many reasons why start-
ups are able to reach their goals and milestones. Successful start-ups never delay the
process of getting things done, and have to work as much as needed until something
is complete.
Budget Masters- A successful start-up is efficient in managing its finances and able
to operate very lean. Every angle should have its own budget assigned and
unnecessary expenses should be avoided. It is important to know what the company
needs in order to accomplish milestones and budget accordingly
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Social Skills - Networking is another reason for start-up success. A founding team
that knows powerful and influential people in the business is completely priceless and
can open the doors to partnerships and to find angel investors in a minute.
Discipline- It starts with self-control and is a product of a strong self-imposed
personal standard. Without discipline, start-ups fail to succeed in business even if
situated in the best economy.
Determination- Strong determination is always necessary for success to take place.
A successful start-up emphasizes the significance of determination when building a
business and never quits, even when the road gets bumpy and scary.
Ability to Adapt to Changes - The best start-ups are always willing to adapt to new
technologies. Adapting to change can lead to major breakthroughs.
Fundraising Skills - Cash flow is the blood line of any business. This means that
businesses can be ruined with inadequate capital. Successful start-ups are the ones
that have sufficient capital to run their business operations. The primary duty of a
start-up CEO is to be able to do start-up fundraising. A good way to raise money online
is platforms like 1000 Angels, as it allows the start-up to raise funds, in some cases,
in just 60 days from accredited investors
Unwavering Belief- Every business’s success revolves around taking risks.
Successful start-ups are prepared to take risks. As they say, the most profitable
investments usually require high amounts of risk
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Master of Time Management- Start-up life can be rough, between the mountain
of things to do and limited staff and resources, the company's success hinges on the
team's productivity and effectiveness to do more with less.
Execution - Lastly, having an idea is just the beginning and really, execution is 98%
in determining each business' success. For this part, the experience of the team is
critical as their backgrounds will help towards making more good decisions than bad
ones.
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ELIGIBILITY FOR START-UP REGISTRATION
• The company to be formed must be a private limited company or a limited
liability partnership.
• It should be a new firm or not older than five years, and the total turnover of
the company should be not exceeding 25 crores.
• The firms should have obtained the approval from the Department of Industrial
Policy and Promotion (DIPP).
• To get approval from DIPP, the firm should be funded by an Incubation fund,
Angel Fund or Private Equity Fund.
• The firm should have obtained a patron guarantee from the Indian patent and
Trademark Office.
• It must have a recommendation letter by an incubation.
• Capital gain is exempted from income tax under the start-up India campaign.
• The firm must provide innovative schemes or products.
• Angel fund, Incubation fund, Accelerators, Private Equity Fund, Angel network
must be registered with SEBI (Securities and Exchange Board of India).
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HOW TO REGISTER A START-UP WITH START-UP INDIA
Step 1: Incorporate Your Business
One must first incorporate the business as a Private Limited Company or a Partnership
firm or a Limited Liability Partnership.
One has to follow all the normal procedures for registration of any business like
obtaining the certificate of Incorporation/Partnership registration, PAN, and other
required compliances.
Step 2: Register With Start-Up India
Then the business must be registered as a Start-Up. The entire process is simple and
online. Log on to the Start-Up India website
(https://www.StartUpindia.gov.in/content/sih/en/home-page.html) and fill up the
form with details of your business and upload certain documents.
Step 3: Documents to Be Uploaded (In Pdf Format Only)
A. A letter of recommendation/support
A letter of recommendation must be proposed along with the registration form. Any
of the following,
i. An Incubator established in a post-graduate college in India has to provide a
recommendation (regarding innovative nature of business) from in a format
specified by the Department of Industrial Policy and Promotion (DIPP);
OR
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ii. A letter of support by an incubator, which is funded (in relation to the project)
by Government of India as part of any specified scheme to promote innovation;
OR
iii. An Incubator recognized by the Government of India has to provide a letter of
recommendation (regarding innovative nature of business) in DIPP specified
format;
OR
iv. Any Incubation Fund/Angel Fund/Private Equity Fund/Accelerator/Angel Network
with not less than 20% in equity, duly registered with SEBI that endorses
innovative nature of the business has A letter of funding;
OR
v. A letter of funding by Government of India or any State Government as part of
any specified scheme to promote innovation;
OR
vi. A patent filed and published in the Journal by the Indian Patent Office in areas
affiliated with the nature of the business being promoted.
B. Incorporation/Registration Certificate
We need to upload the certificate of incorporation of the company/LLP (Registration
Certificate in case of partnership)
C. Description of your business in brief
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A brief description of the innovative nature of the products/services.
Step 4: Answer Whether You Would Like to Avail Tax Benefits
Start-Ups are exempted from income tax for 3 years. But to avail these benefits, they
must be certified by the Inter-Ministerial Board (IMB). Start-ups recognized by DIPP,
Govt. of India can now directly avail IPR related benefits without requiring any
additional certification from IMB.
Step 5: You Must Self-Certify that You Satisfy the Following Conditions
a) You must register your new company as a Private Limited Company, Partnership
firm or a Limited Liability Partnership
b) Your business must be incorporated/registered in India, not before 5 years.
c) Turnover must be less than 25 crores per year.
d) Innovation is a must– the business must be working towards innovating something
new or significantly improving the existing used technology.
e) Your business must not be as a result of splitting up or reconstruction of an existing
business.
Step 6: Immediately Get Recognition Number
That’s it! On applying you will immediately get a recognition number for your Start-
Up. The certificate of recognition will be issued after the examination of all your
documents.
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However, one should be careful while uploading the documents. If on subsequent
verification, it is found to be obtained that the required document is not
uploaded/wrong document uploaded or a forged document has been uploaded then
you shall be liable to a fine of 50% of your paid-up capital of the Start-Up with a
minimum fine of Rs. 25,000.
State wise Performance (Till Dec 2018) given by Government of India:
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BENEFITS:
Simple process
Government of India has launched a mobile app and a website for easy registration
for Start-Ups. Anyone interested in setting up a Start-Up can fill up a simple
form on the website and upload certain documents. The entire process is
completely online.
Reduction in cost
The government also provides lists of facilitators of patents and trademarks. They
will provide high quality Intellectual Property Right Services including fast
examination of patents at lower fees. The government will bear all facilitator fees
and the Start-Up will bear only the statutory fees. They will enjoy 80% reduction
in cost of filing patents.
Easy access to Funds
A 10,000 crore rupees fund is set-up by government to provide funds to the Start-
Ups as venture capital. The government is also giving guarantee to the lenders to
encourage banks and other financial institutions for providing venture capital.
Tax holiday for 3 Years
Start-Ups will be exempted from income tax for 3 years provided they get a
certification from Inter-Ministerial Board (IMB).
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Apply for tenders
Start-Ups can apply for government tenders. They are exempted from the
“prior experience/turnover” criteria applicable for normal companies answering to
government tenders.
R&D facilities
Seven new Research Parks will be set up to provide facilities to Start-Ups in the
R&D sector
No time-consuming compliances
Various compliances have been simplified for Start-Ups to save time and money.
Start-Ups shall be allowed to self-certify compliance (through the Start-Up mobile
app) with 9 labour and 3 environment laws (for list of white industries which are
eligible under self-compliance.
Tax saving for investors
People investing their capital gains in the venture funds setup by government will
get exemption from capital gains. This will help Start-Ups to attract more investors.
Choose your investor
After this plan, the Start-Ups will have an option to choose between the VCs, giving
them the liberty to choose their investors.
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Easy exit
In case of exit – A Start-Up can close its business within 90 days from the date of
application of winding up
Meet other entrepreneurs
Government has proposed to hold 2 Start-Up fests annually both nationally and
internationally to enable the various stakeholders of a Start-Up to meet. This will
provide huge networking opportunities.
The result of first ever Start-Up state ranking were announced in December 2018
by the Department of Industry and Internal Trade based on the criteria of policy,
incubation hubs, seeding innovation, scaling innovation, regulatory change,
procurement, communication, North-Eastern states, and hill states.
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ROLE OF GOVERNMENT:
The Ministry of Human Resource Development and the Department of Science and
Technology have agreed to partner in an initiative to set up over 75 such Start-Up
support hubs in the National Institutes of Technology (NITs), the Indian Institutes of
Information Technology (IIITs), the Indian Institutes of Science Education and
Research (IISERs) and National Institutes of Pharmaceutical Education and
Research (NIPERs).
The Reserve Bank of India said it will take steps to help improve the ‘ease of doing
business’ in the country and contribute to an ecosystem that is conducive for the
growth of start-up businesses.
Department for Promotion of Industry and Internal Trade (DPIIT)
Recognition
Under the Start-Up India Scheme, eligible companies can get recognised as Start-Ups
by DPIIT, in order to access a host of tax benefits, easier compliance, IPR fast-
tracking
Start-Up India: 80 IAC Tax exemption:
Post getting recognition a Start-Up may apply for Tax exemption under section 80 IAC
of the Income Tax Act. Post getting clearance for Tax exemption, the Start-Up can
avail tax holiday for 3 consecutive financial years out of its first ten years since
incorporation.
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Start-Up India: Tax Exemption under Section 56 of the Income Tax Act
(Angel Tax)
Post getting recognition a Start-Up may apply for Angel Tax Exemption.
Eligibility Criteria for Tax Exemption under Section 56 of the Income Tax Act:
a. The entity should be a DPIIT recognized Start-Up
b. Aggregate amount of paid up share capital and share premium of the Start-Up
after the proposed issue of share, if any, does not exceed INR 25 Crore.
SOME GOVERNMENT SCHEMES:
1. NewGen IEDC – Introduced last year, the NewGen Innovation and
Entrepreneurship Development Centre is applicable to industries like healthcare
services, chemicals, hardware, aeronautical/defense, IT, AR/VR, construction,
design, food and beverages, textiles, nanotechnology, and renewable and non-
renewable energy sources, among others. It provides a one-time non-recurring
loan of up to 25 lakhs to finance Start-Up units.
2. AIC – Headed by the Atal Innovation Mission, the Atal Incubation Centres provide
grant-in-aid of Rs. 10 Cr to every AIC. The duration of the grant is a maximum of
5 years. Set up under the NITI aayog, the purpose of AICs will be to provide
financial aid and infrastructure assistance to different Start-Ups in sectors like
chemicals, technology hardware, healthcare & life sciences, aeronautics/aerospace
& defense, agriculture, AI, AR/VR (augmented + virtual reality), automotive,
telecommunication & networking, construction, design, non-renewable energy,
renewable energy, green technology, fintech, Internet of Things, nanotechnology,
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and food & beverages, among others. Conducting training and entrepreneurship
workshops, organizing inspirational programs, enabling access to necessary
infrastructure, prototyping or research facilities, as well as creating a group of
mentors to guide the entrepreneurs, are some of the tasks that an AIC is expected
to perform.
3. CLCSS – Under MSME, the Credit Linked Capital Subsidy Scheme is a means to
provide subsidy to manufacturing units who have upgraded their machinery with
state-of-the-art equipment. This scheme is meant to encourage manufacturing
units to buy the latest equipment, and facilitate technology upgradation. The way
this works is that any SSI unit which has upgraded its machinery can apply for a
15% subsidy on a loan amount of up to 1 Cr.
4. SMILE – The SIDBI Make in India Soft Loan Fund for Micro, Small, and Medium
Enterprises provides soft loans to MSME units at reasonable terms, to meet the
debt-equity ratio of a unit or to help in its growth and expansion. The loan is
applicable for a maximum period of 3 years. The amount disbursed varies on the
category the unit falls under, with 10% or a maximum of 20 lakhs for General
category, and 15% or a maximum of 30 lakhs for SC/ST, PwD, and women.
5. Loan for Rooftop Solar PV Power Projects – Headed by the Indian Renewable
Energy Development Agency (IREDA), this scheme promotes renewable energy
development by providing support for solar PV projects on rooftops. The IREDA
will provide 70% of the project cost, while the entrepreneur will contribute the
remaining 30% of the amount. In some projects, where the unit has great track
record, higher benefits, and more productivity, the IREDA may extend the loan
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amount to 75% of the project cost. The loan has to be repaid in a maximum of 9
years.
6. M-SIPS – The Modified Special Incentive Package Scheme provides capital
subsidies to manufacturing and electronic units in sectors of technology hardware,
IoT, automotive, renewable and non-renewable energy sources, nanotechnology,
green technology, and aerospace and defense industries. Under this scheme,
there’s a provision for 20% capital subsidy in SEZ, and 25% in non-SEZ, for
business units in manufacturing and electronics.
7. Coir Udyami Yojana: Headed by the Coir Board, this scheme aims to set up coir
units across India. It funds project costs up to Rs 10 Lakh and one cycle of working
capital. The total funds lent should not exceed 25% of the project cost. The capital
expenditure is financed through a term loan and working capital in cash credit (short
term cash loan). The rate of interest will be at par with the base rate. Repayment
is to be made within 7 years.
8. Market Development Assistance Scheme for MSMEs: This is a scheme that
facilitates and helps the micro, small and medium enterprises gain exposure by
participating in international exhibitions and trade fairs under the MSME India kiosk.
The scheme is aimed at displaying the potential as well as strengthening the small
and medium manufacturing units.
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FINANCING METHODS FOR START-UPS
The main funding options include:
• Personal savings,
• Loans: MUDRA, Loans by BANKS, FIs
India has the third largest Start-Up base in the world (2016 report by NASSCOM),
behind the US and the UK Government Loan for Business Start-Ups in India
1. The Credit Guarantee Scheme (CGS): The credit guarantee scheme for micro
and small enterprises was launched by the government of India, to make available
collateral free credit to the micro and small enterprises sector. Both the new and
the existing enterprises are covered under this scheme. This scheme helps micro
enterprises and first-generation entrepreneurs, avail small business loans at a
reasonable interest rates. The amount of loan given to any applicant, depends on
the individual’s eligibility and feasibility of the business. The maximum limit however
is Rs 100 lakhs. The scheme also caters to strengthen and rehabilitate existing
sick units. With SIDBI (Small Industries Development Bank of India) as its partner,
the Government of India is running this scheme (CGS), which gives unsecured loans
to Micro and Small Enterprises. A maximum of Rs 100 Lakhs can be borrowed in
the form of Term Loans or Working Capital Loans. Both new and existing Micro and
Small Enterprises engaged in manufacturing or service activities except in
Educational Institutions, Agriculture, Self Help Groups (SHGs) and Training
Institutions can avail these loans.
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2. MUDRA Loan Scheme: The purpose of the MUDRA (Micro Units Development
and Refinance Agency Ltd) scheme, is to provide adequate funds to the micro units
and the non-corporate small business sector. The government has identified the
lack of substantial funds required for the growth of the small and medium scale
business in the country. The scheme has been designed keeping in mind the stage
of growth and funding requirements of the beneficiary micro units and so is
categorized under three stages.
They are: Banks facilitate loans under the MUDRA scheme as per customer
requirements. The loans under this scheme are collateral free loans. Micro-Units
Development and Refinance Agency Ltd. also known as MUDRA, is an agency
launched by the Government of India. It funds non-corporate small business sectors
in the country. The loans under MUDRA are granted for non-farm income-
generating activities.
Categories under MUDRA:
• Shishu: These are loans up to Rs 50,000 with no collateral.
• Kishor: These are loans above Rs 50,000 and up to Rs 5 Lakhs.
• Tarun: These are loans above Rs 5 Lakhs and up to Rs 10 Lakhs.
These loans are designed based on the stage of business and funding needs of the
beneficiary.
3. Stand Up India Scheme: Stand-Up India Scheme Facilitates bank loans between
Rs 10 Lakhs and 1 Crore, to at least one Scheduled Caste (SC) or Scheduled Tribe
(ST) borrower for setting up a greenfield enterprise. This enterprise may be in
manufacturing, services or the trading sector. The loans are granted to at least one
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woman borrower per bank branch. The scheme aims at promoting woman
entrepreneurship among the scheduled castes and scheduled tribes. Stand-Up India
is a special government scheme which aims to financially empower SC/ST and
women entrepreneurs of the country. It also aims to get rid of License Raj and set
up Greenfield enterprises. An amount ranging from Rs 10 Lakhs to Rs 1 Crore can
be borrowed to start a manufacturing, trading or service unit. The loan tenure is 7
years. These loans are to be granted to at least one SC or ST and at least one
woman borrower per bank branch.
4. Bank Credit Facilitation Scheme: This scheme was started by National Small
Industries Corporation (NSIC), to fund MSMEs registered in India. NSIC has
partnered with various nationalized and private sector banks and arranges credit
support from banks at no cost to the MSMEs. The credit repayment tenure depends
on the income generated. It varies from 5-7 years and can go up to 11 years in
exceptional cases.
5. National Bank for Agriculture and Rural Development (NABARD): NABARD
is a development bank that aims to provide and regulate credit and other facilities
that helps to promote and develop agriculture, cottage and small industries,
handicrafts and village industries. NABARD is entrusted with providing refinance to
lending institutions in rural areas. It acts as a facilitator for rural prosperity
promoting institutional development by evaluating, monitoring and inspecting the
client banks. The borrowers are required to carry out the necessary paperwork and
submit the necessary documents to avail these loans. As these schemes are backed
by the government, some of the loans are collateral free.
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6. Venture Capital: Venture capital is also a way in which the private and public
sectors can construct an institution that systematically creates business networks
for the new firms and industries, so that they can progress and develop. This
institution helps identify promising new firms and provide them with finance,
technical expertise, mentoring, marketing "know-how", and business models.
Flipkart, India’s leading e-commerce majorly owned by Walmart, announced the
launch of a Venture Fund to back early stage start-ups working on next generation
technology for the internet economy in the country.
7. Angel Investors - An angel investor is usually a high net worth individual who
provides financial backing for small Start-Ups or entrepreneurs. Often, angel
investors are found among an entrepreneur's family and friends. The funds that
angel investors provide may be a one-time investment to help the business get off
the ground or an ongoing injection to support and carry the company through its
difficult early stages.
8. Crowdfunding - Crowdfunding is the practice of funding a project or venture by
raising small amounts of money from a large number of people, typically via the
Internet. Crowdfunding is a form of crowdsourcing and alternative finance.
Check list before applying for the loan:
• Personal background: details of your background are checked.
• Crimes committed can disqualify the applicant or delay the process of
sanctioning the loan
• Resume or business background: details of the business and the applicants
experience in growing the business will be asked for.
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• Business plan: the applicant needs to write a well thought business plan in the
loan application.
• Personal and business tax returns: applicant must submit personal and business
tax returns for the past 3 years.
• Financial statement: applicant must submit the profit and loss statements,
bank statements, balance sheets, and cash flow forecasts. Legal documents:
applicant must provide proof that the business is run legally. Collateral (if
required): Collateral will strengthen your profile and may help you get a bigger
amount of loan.
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SUCCESSFUL START-UP STORIES IN INDIA
More than 1,200 start-ups came up in 2018, including eight unicorns, taking the total
number to 7,200 start-ups, NASSCOM reported.
The report also said there was a 50 per cent increase in number of advanced tech
start-ups since 2017. According to it, start-up ecosystem has regained momentum
after the slowdown in 2016-17. These companies created 40,000 new direct jobs while
there was threefold increase in indirect jobs.
The report said more than 400 plus start-ups expanded globally including travel and
hospitality company Oyo, cab aggregator Ola, education technology Byju's, Zomato
and Wittyfeed.
SOME OF THE RENOWNED YOUNG ENTREPRENEURS OF INDIA
1. Advait Thakur, 15 Years
Founder & CEO – Apex Infosys India
Advait is an Indian computer programmer. He is certified by Google and Bing,
and is ranked 4th in Wikia’s young entrepreneur list of 2017. In 2015, at the
age of 12, he founded Apex Infosys India which is now a domain name registrar
and provides digital solutions to different clients across the globe. At the age
of 14, he developed an app named “Technology Quiz” to help kids learn about
science and technology.
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2. Shravan Kumaran and Sanjay Kumaran, 17 and 15 years respectively
Co-founder, President & Co-founder, CEO respectively: Go-
Dimensions
Sanjay and Sharavan (biological brothers) are the youngest entrepreneurs of
India. Together, they’re the brain behind the foundation of GoDimensions in 2011
at the age of 12 and 14 years old. Both are the world’s youngest mobile
application programmers who developed more than 11 apps which have
received 70,000+ downloads and have an average rating of 4.5. Both brothers
were listed in Forbes 30 under 30 list in 2017.
3. Farrhad Acidwalla, 25 Years
Founder – Rockstah Media
At the age of 16, he borrowed $500 from his father to buy an online domain
and started organizing a web community and website design particularly
focused on aviation and aeromodelling. He sold this business at $25,000 later.
He then used that money in founding a web developing media firm
named Rockstah Media.
4. Arjun Rai, 20 years
Founder & CEO– Canvs+ and Odyssey Ads
Arjun had entrepreneurial skills since he was 7 years old. He was working as
COO of the online advertising company in 2010 which he left and started its
own Odysseys Ads offering solutions for the 21st-century marketers.
He had already founded two successful Start-Ups while he was studying and
graduating from New York Institute, named as BizDen, and FuelBrite.
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5. Sreelakshmi Suresh
Sreelakshmi Suresh (Young Indian Entrepreneur), the youngest web designer and
CEO in the world. At the mere age of 10, she established eDesign — a venture
which is now a web designing company that offers SEO, web design, and other
web — related services. Sreelakshmi has developed over 100 websites for
renowned institutions and organizations across India!
Scenarios Before and After Start-ups:
S. No. Before After
1 Cash transactions Paytm
2 Direct purchase of mobile phones and appliances Flipkart
3 Buses and cabs OLA
4 Standing in queue for booking flight tickets Make my trip
5 Direct purchase of dresses Shop Clues
6 Direct booking of rooms OYO rooms
7 Food Zomato
8 Standing in queue for booking bus tickets Red bus
9 Visiting hospital Practo
10 Visiting banks Bank bazaar
SOME OF THE RENOWNED START-UP STORIES IN INDIA
1. Paytm - An Indian electronic payment digital wallet and e-commerce company
based out of Delhi NCR, India. The company founded in August 2010 by Vijay
Shekhar Sharma.
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2. Flipkart - Many people call it as an Indian Amazon. Walmart has owned around
77% of shares from this Bengaluru-based firm.
3. Ola Cabs - ANI Technologies Pvt. Ltd. stylised as OLA, an Indian origin online
network and aggregator for day-to-day transport. Ola founded by an IIT
Bombay Alumni called Bhavish Aggarwal and Ankit Bhati in December 2010,
which has become India’s most popular mobile app for transportation.
4. Make My Trip - An Indian online travel company, founded by Deep Kalra in
2000. Headquartered in Gurgaon, Haryana, the company provides online travel
services like flight tickets, domestic and international holiday packages, hotel
reservations, rail and bus tickets, etc.
5. ShopClues - It is India’s first and the largest managed marketplace, clocking
more than 100 million monthly visitors on its website. Founded in July 2011 in
Silicon Valley, with 5cr listed products and over 500,000 + merchants.
6. OYO Rooms - OYO is India’s largest branded network of hotels founded by
Ritesh Agarwal, India’s first graduate of the Thiel Fellowship, a program started
by Paypal founder, Peter Thiel. OYO currently operates in India & Malaysia with
over 200+ locations.
7. Zomato - A restaurant search and discovery app, providing in-depth
information for over 1 million restaurants across 23 countries.
8. RedBus - redBus.in, acquired by Ibibo, is the India’s largest online bus
ticketing website with the largest network of bus operators 1800+ and growing)
and satisfied customer bookings up to 80,000 tickets a day. They provide over
67000+ live routes across India.
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9. Practo - Practo, a health tech company with the motto of #DoGreat is
prospering greatly with 2,00,000 doctors and 20 million patients across the
world has kick-started its journey in the year 2008 from Bengaluru by two
NITians Shashank and Abhinav Lal.
10. BankBazaar - BankBazaar, a FinTech company took its shape in the year
2008, Arjun Shetty and Rati Shetty along with Adhil Shetty established
BankBazaar, the one destination for comparison and application of financial
products in India. The company is also providing Free Credit score service for
the customer with few steps. BankBazaar started its journey in Chennai by tying
up with ING Vysya and HDFC. Currently, BankBazaar is offering its services to
5,00,000 customers across 1336 cities and towns in India with 30 partners.
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SUCCESS STORY OF URBAN CLAP
Legal Name - UrbanClap Technologies India Pvt. Ltd
“UrbanClap is a platform to make our urban lives more fulfilling to solve our
needs in a clap. Hence the name, UrbanClap”
UrbanClap is recognized as the fastest-growing Start-Up in India. It is a mobile
marketplace for local services. They help customers hire trusted professionals for all
their service needs. They are also staffed with young, passionate people working
tirelessly to make a difference in the lives of people by catering to their service needs
at the doorsteps.
Story Before Urbanclap:
In early 2014, Varun Khaitan and Abhiraj Bhal founded Cinema Box, a service which
helped travellers stream movies on their smart phones while on a train, bus or airplane
through Wi-Fi.
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Chandra’s first start-up Buggi was focussed on the carpooling and ride sharing space.
It is a mobile application to book on-demand auto rickshaws.
Birth of Urbanclap:
The idea was to redefine how local services and servicemen were being hired in India.
The founders saw opportunity in the broken system of how the country connected
with various service providers.
The company began with a vision of going beyond being a mere search and discovery
platform by building a business model that encompasses on-boarding service
providers, training them, managing quality control while at the same time giving users
the assurance of standardized services and prices on a platform where they could
make payments and write reviews. UrbanClap rejects as many as 75% of the supplier
applications it receives to keep quality intact.
Founders & Board Members of Urban Clap:
1. Abhiraj Bhal
2. Raghav Chandra
3. Varun Khaitan
Batch mates from IIT Kanpur Varun Khaitan and Abhiraj Bhal have known each
other for a decade now. After spending a few years at The Boston Consulting
Group, both started discussions on what and how-to start-up over weekend
conference calls across the seas. They later got together in Delhi. They met Raghav
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Chandra, an engineer at Twitter, through mutual friends and connected instantly.
Their shared ambitions, interests and complementary skill sets drew them
together.
The company founded by the trio, UrbanClap, is claimed to be one of the
largest mobile services market place in India today.
Investors in Urban Clap:
1. VY Capital
2. Bessemer Venture Partners
3. SAIF Partners
4. Accel Partners
5. Tata Sons
6. Snapdeal co-founders - Kunal Bahl and Rohit Bansal
7. Stead-view capital
Operations:
It is a privately held company backed by venture capital fund with its primary office in
Gurgaon, Haryana.
UrbanClap has created a technology platform, a website and a mobile app, and has a
presence in eight cities: Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata,
Mumbai and Pune. It recently expanded operations into Dubai with five services.
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Among the cities, Delhi contributes the largest share to its revenue, followed by
Bengaluru and Mumbai. While the services were recently launched in Ahmedabad and
Kolkata, Bhal targets a launch in Chandigarh and Jaipur.
UrbanClap does not own its inventory of independent professionals and service
providers on its platform; it instead aggregates them and provides a standardized
service to the end customer.
Growth so far...
a) 100000+ Trusted Professionals & Verified experts
b) 3000000+ Happy Customers
c) 8 Cities in a Year
d) 107 live services
Acquisitions:
Urbanclap has also acquired two companies so far
1. Good service
2. Handy home.
Services:
Services provided by urban clap includes the following
Beauty Services Hair Care
Skin care and makeup
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Interiors Planning & Design
Decor & Style
Wedding
Wedding invites, planning, fashion,
makeup, mehandi, photography.
Homecare Appliance repair, CCTV, Packers and
movers, Pest control tips.
Lifestyle Health & Wellness, Foor & Diet, Birthday
Party, travel
Business Web & Graphic design, Legal etc.,
Process:
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Income:
UrbanClap’s operating revenue consists of commissions it makes from each successful
service offered. It charges a commission of around 10-20% of the transaction fee from
service providers, depending on the type of service availed by the customer.
In case of beauty, its take rate is 20% of the value of services rendered. As a result,
beauticians are able to see a three to four times increase in earnings vis-à-vis working
in a beauty salon, says the company.
Operating Revenue:
Operating revenue grew four times to Rs. 45 crore in FY 2017-18 from Rs11 crore in
FY 2016-17. In the financial year 2018, the revenues reached Rs. 53.37 Cr
As per economic times – The Company has reported strong top line growth driven by
a jump in service orders and entry into new verticals during the financial year 2019.
UrbanClap’s net worth for FY18 has been $25.97 Mn (INR 190.46 Cr).
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Team Size & Requests:
With a team of 320, the company clocks about 7,000-8,000 service requests daily.
While the average basket size is Rs3,000- 4,000, the price of a service can range from
Rs200-250 for plumbers to as high as a few lakhs for an interior design project.
IPO: We are not building this company to sell. We are building this company to last
forever, so we are not going to sell. We will go for an initial public offering (IPO) and
we will be a very large Indian and potentially a global company.
No wonder UrbanClap is one of the fastest growing start-ups in India. It simply
connects online users with offline businesses. Their vision is to use technology and
smart processes to structure the highly unorganized service market in India and
emerging markets.
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CHALLENGES
1. Marketing issues: Branding Problem:
Marketing an established brand, such as Dove, is one thing. Trying to start a
business, create a product, find clients and finance it all is much more difficult.
Start-ups need to be more proactive and the challenge was in identifying the right
venues where prospective clients would be located. In addition to figuring out how
to reach prospects, deciding to invest in marketing was daunting because of the
cash flow challenges that most start-ups face.
2. MCA Compliance cost:
A Start-Up running as a private limited company has to follow numbers of
compliance as laid down by various statutes and other regulatory bodies. These
include but are not limited to the periodic filing of tax and other returns, holding
the board and other meetings, maintaining statutory books and accounts etc. Non-
compliance can attract penalties and may also bring an end to business in extreme
cases.
3. Competition of big players:
A start up needs to understand the type of competition it is playing against. The
different types of competitions start-up faces are:
Direct competition: are competitors who target the same type of consumers and
do almost the same thing or want to achieve the same thing.
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Indirect competition: are competitors that might be vending something similar to
your product and targeting the same niche market just in a delusional form.
Once you get that all figured out its time to buckle down to the subsets of the
competition.
Actual competition: are business that are currently in the market with you.
Potential competition: are businesses to come. You still got to worry about them
because they can swipe you out your spot.
The best way you can give your 110% and have a higher stake in winning the
market is by comparing your Start-Up or business with others around you. Always
penetrate the businesses, look how to destroy the competitors’ business legally.
4. Cash Flow challenges and Huge CAPEX:
One of the most important aspects of your Start-Up is the cash flow. Cashflow is
one of the ultimate deciders of business success. As a business grows, borrows
and makes profit, it will begin to accumulate costs and income streams. All of these
combine together to form cashflow. If you’re not in control of cashflow, however,
you will soon find your Start-Up falling down.
Cashflow needs to be there before a business has even the faintest whiff of profit,
because cashflow keeps the doors of the start-up open. The term itself defines the
relationship between money that comes in and the money that goes out of a
business. You need more coming in than going out obviously, but it is also
important to be sure that money comes in on time so you can pay your overheads
on time. If your overheads are not paid, then you definitely run the risk of losing
money, as your debts accrue. And as debts accrue, you will find yourself facing an
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unbeatable wave of stress and pressure as you try to make enough money just to
stay open as a Start-Up.
5. Initial Pricing and IPR issues:
One of the most common causes of new business failures is not having enough
cash to meet expenses, especially in the first 6-12 months of starting. Some of the
initial costs of setting-up a business:
• Set up Cost,
• Investigatory cost,
• Pre-launch cost,
• Professional fees
• Insurance
• Premises costs
• Staffing and employment
• Equipment and supplies
• Stock
• Sales and marketing
• Finance
• Technology costs
And Research expenditures, registration process for Intellectual Property Rights
including legal expenses.
Pricing is another issue for start-up as they cannot compete with established giants
which have a huge cost cut. These new start-ups need to cover all the overheads
which add up to the cost that act as a deterrent to low price.
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6. Environmental factors:
The environment can pose many risks to your business, but climate change is
perhaps the biggest environmental risk. Climate change refers to the build-up of
man-made gases in the atmosphere that trap the sun's heat, causing changes in
global weather patterns. It has environmental, economic and social impacts.
Climate change risks for your business may include:
• frequent extreme weather - you may have increased insurance costs,
more damage to property and resources, and disruption of power and
water. Customers may be unable to visit or contact your business, or
suppliers may be unable to deliver goods or services.
• decreased demand - there may be less demand for your goods and
services if they are not environmentally friendly, or competitors with energy-
efficient products may target your customers. It may also be difficult to
attract and retain staff if your business is not sustainable.
• global impacts - overseas suppliers may be unable to deliver goods or
services due to climate change events in their country or international
customers being encouraged to buy locally.
• increased costs - you may experience higher costs for energy, water and
other resources. Water restrictions may also affect your business.
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COMPLIANCES FOR START-UPS IN INDIA
Compliance is a fundamental component of corporate governance and is integral to
business ethics. In India, for any lapses in compliances, the CEO (management) and
the Board of Directors are culpable. No matter how small or large a company, it is
imperative that they be compliant with the legal framework set forth by the
Government.
Legal compliance is a broad subject and covers multiple areas such as labour,
employment, tax, accounting, industrial, corporate law, environment laws and others.
Regulations and de-regulations in the industry drive the need for constant compliance
and hence demand that adequate compliance constructs and methodologies be put in
place within organisations to fulfill those obligations. Compliance and its importance,
is often overlooked by many Start-Ups which are new to the business ecosystem
simply because they are not aware of the existing laws.
Complying with various regulations in India haunts every Start-Up. In general,
compliance means conforming to a rule, such as a specification, policy and standard
or law. Regulatory compliance describes the goal that organisations aspire to achieve
and the steps taken to comply with relevant laws and regulations.
Due to the increasing number of regulations and the need for operational
transparency, organizations are increasingly adopting the use of consolidated and
harmonized sets of compliance controls. Compliance and its importance are often
overlooked by many Start-Ups new to the business ecosystem simply because they
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are not aware of the existing laws. Ignorance may not be bliss in such cases as it
affects a Start-Up’s viability and attractiveness to a potential investor.
The foremost and pretty crucial thing after the incorporation of a business entity is to
follow up with its compliances. Hence, before we register a company, we should know
whether we would be able to comply with its compliances or not. For this same, we
need to find out the compliances of the business entity we have chosen to register
with. So, before moving forward it’s important to discuss the right type of business
structure.
GST Registration and Compliances
1. Earlier traders had to register under VAT, Manufacturers under excise and
Service providers under Service Tax. Now there is only a single GST registration
for all these persons and input credit can be availed for all the transactions.
Earlier a VAT dealer could not avail ST credit and vice versa. Similarly, a VAT
dealer or a Service provider could not avail Excise Duty credit.
2. Under GST, we are also eligible to avail Input Tax credit on Plant and Machinery
and other assets except Motor vehicles.
3. If you are doing business with B2B costumers, it is advisable to get GST
registration done, even if the Turnover is less than 20 Lakhs. This will enable
the corporate customers to claim input credit on purchase of your
goods/services. However, if your turnover is less than 20 lakhs, you have an
option not to register under GST
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4. Find out the HSN codes/ SAC codes for your products/Services and the rate of
tax applicable to them.
5. If you have multiple business places, in different states, it is mandatory to take
separate registration for each place of business. Stock transfer to different
branches will be a taxable supply under GST.
6. In order to claim input GST credit, make sure that you have a proper GST
invoice from the supplier with GST Number and Rate of tax clearly mentioned
therein. Under GST law, you are eligible to claim credit only if the supplier files
the returns and pays his GST liability. Make sure that he files with details of his
sales with your GST number in his GSTR1. Practically, it would be advisable to
make the payment to supplier only after you receive the input GST credit.
7. If you have both exempt and taxable turnover, maintain proper bifurcation for
each as input credit for exempt sales is not allowed.
8. For Inter-state supply charge IGST and for Intra-state charge, SGST and CGST.
The tax rate, amount and GST number is to be shown clearly on the invoice.
Take the GST number if the customer is registered so that you can pass on the
GST credit.
9. Supply from a Principal to Agent or vice versa is a Taxable supply under GST
10. There are some blocked credits for Rent-a-cab, Purchase of motor vehicles,
payments to clubs, Insurance etc. Do not assume that you can claim credit on
all inputs where GST number is mentioned on the invoice.
11. Normally, GST liability needs to be paid before 20th of the succeeding month.
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12. Accounting Records to maintain for GST ACT-Inward and Outward Register,
Stock Register, Account of Advances, Tax Details Register, Vendors and
Customers Details Register, Details of place of storage of goods, Production
Details Register.
TAN, TDS and Income Tax
TAN is a 10-digit alphanumeric number. Every Assessee who is liable to deduct TDS
is required to apply for TAN. All Companies and Partnership firms are liable to deduct
TDS and remit it to IT department. Individuals are liable to deduct TDS only if they
have to do Tax Audit.
TDS shall be deducted on payments such as salaries, interest, professional fee, rent,
brokerage and commission, dividends.
Salary is one of the main payments where Tax needs to be deducted. Here we need
to compute tax for each employee and deduct on a monthly basis.
Steps to follow:
1. Apply for TAN
2. Check the nature of each payment that you are making. See if they fall under
the TDS purview.
3. Deduct the specified % of TDS and make the payment to the vendor.
4. While doing quarterly filing of TDS returns, mention the correct PAN of the
vendor.
5. In case the vendor doesn't have a PAN, deduct at the flat rate of 20%.
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6. Make TDS payments to the IT department before 7th of next month for all
months except for March, and within 30th April for the month of March.
7. Interest will be levied at 1% for every month or part of a month for delay in
deduction and at 1.5% for every month or part of a month for delay in
remittance after deduction.
8. If the company remains non-compliant regarding TDS provisions, the TDS
amount and interest thereon shall be charged on the assets of the company or
upon the principal officer who is required to deduct and pay TDS;
9. Further, the expenses on which TDS was required to be deducted and paid and
has either not been deducted or paid, such expense shall be disallowed in
computation of total income and taxes thereon.
10. Advance Income tax to be computed and paid periodically on or before the due
dates prescribed.
Annual filing of Income Tax returns on or before due dates
1. Filing of Tax Audit Report. Tax Audit is applicable when the Turnover exceeds
the specified limit as per Section 44AB of the Income Tax Act.
Cash Payments and others
To the maximum extent possible, it is advisable to avoid cash payments. Any cash
payment in excess of INR 10,000 will be disallowed U/s 40A (3).
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If you are making any foreign payments make sure that all compliances are met. It
may require form 15CA/15CB etc. if when paid through credit cards. TDS will also be
attracted and reverse GST also may apply in most of the cases.
Tax Audits
Tax audits are required under Section 44AB of India's Income Tax Act 1961. This
section mandates that those whose business turnover exceeds INR 1 crore and those
working in a profession with gross receipts exceeding INR 50 Lakhs, must have their
accounts audited by an independent chartered accountant. The audit report is made
using Form 3CD along with either Form 3CA or Form 3CB. The provision of tax audits
are applicable to everyone, be it an individual, a partnership firm, a company, or any
other entity. The tax audit report is to be completed by September 30 after the end
of the previous FY.
Category of Taxpayer FY 2016-17 Onwards
Business (Not opting Presumptive Income
Scheme) 1 crores
Professionals (Not opting Presumptive
Income Scheme) 50 Lakhs
Business opting Presumptive Income scheme
u/s 44AD 2 crores
Professionals opting Presumptive Income
scheme u/s 44ADA 50 lakhs
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PF, ESI Act
PF Act applies to every establishment where 20 or more persons are employed. If the
salary of the employee is less than 15000 p.m., PF is mandatory. Approximately 12%
is deducted as contribution from the employee's salary and the same percentage is
contributed by the employer to the fund.
ESI Act applies to factories employing 10 or more persons. Wage ceiling is INR 21000
p.m in the case of ESI. Currently, the employee's contribution rate is 1.75% of the
wages and that of employer's is 4.75% of the wages paid/payable in respect of the
employees in every wage period.
Shops Act
The Shop and Establishment Act in India is promulgated by the state and may slightly
differ from state to state. However, as per the Act, all shops and commercial
establishments operating within each state are covered by the respective Shop &
Establishments Act.
Professional Tax
Professional Tax is a tax levied on professions and trades in India. It is a state-level
tax and has to be compulsorily paid by every member of staff employed in private
companies. The owner of a business is responsible to deduct professional tax from the
salaries of his employees and pay the amount so collected to the appropriate
government department.
Professional tax is usually a slab-amount based on the gross income of the
professional. It is deducted from his income every month. In case of salaried
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employees and wage earners, Employer is liable to deduct professional tax with the
State Government. In case of other class of Individuals, this tax is liable to be paid by
the person himself.
Employee related compliances
1. PAN, Aadhar etc. to be collected from employees.
2. Advisable to open bank account for salary transfer or use an existing account.
Cash payments to be avoided
3. Collect Investment Declaration in the beginning of every financial year and
Investment proof by Feb of each FY. This is for proper computation of TDS and
remittance.
4. Gratuity needs to be paid to the Employee leaves after completion of 5 years
of continuous service.
Specific Compliances w.r.t Private Limited Companies
1. At least 4 Board Meetings to be held in a year. Minutes to be maintained
2. AGM needs to be held every year. Approval of financial statements,
appointment of auditors, declaration of dividends etc. is the main agenda.
3. The Directors are required to inform the Company about their directorship in
other companies every year.
4. There are many annual returns to be filed with the ROC.
E.g.: MG-7, AOC-4, MBP-1, DIR-8, Director's Report
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Each business should also check the compliance requirement under specific
Acts such as Factories Act, Environment and Protection Act, Money Laundering
Act etc.
Accounting, Reporting and Maintenance of Records
It is advisable to maintain monthly accounts in any Accounting software so that all the
required statutory and management reports can be generated. Monthly Profit and Loss
Account, Balance Sheets, Sales and Purchase Reports, Accounts Receivables/Payables
Reports are not only required for statutory compliances but for the management too.
Proper Financial Accounting and Reporting can help the start-ups to understand the
costs involved in each business decision and can help in making critical decisions. It is
advisable to maintain profitability customer wise/Project wise and also for each vertical
separately. These features are available in most of the Accounting software available
currently.
According to section 36(1) of CGST Act every registered person is required to keep
and maintain books of accounts and other records 72 months from the due date of
furnishing the annual return for the year pertaining to such accounts and records.
Under the Income Tax Act, provides that Assessees are required to preserve the
specified books of account for a period of 6 years from the end of the relevant
assessment year, i.e., for a total period of 8 previous years.
As per Sec 128 of the Companies Act 2013, a company is required to maintain its
books of account and vouchers for a period of 8 years immediately preceding the
current year.
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Maintaining physical as well as scanned documentation will help in Audits and for tax
purposes under GST and Income Tax Acts.
How to Comply?
1. Become familiar with your business and the applicable regulations
The basic thing which an entrepreneur must understand is the knowledge of
legislation/Acts that are applicable to his business. There are countless national,
state and foreign regulations which may impact the business immediately or in
the near future.
2. Demonstrate investment of thought and efforts into formulating a
compliance plan
Written policies and procedures should explain the mechanisms for effective
compliance to all your employees and any auditors or regulators. (your compliance
controls will change and improve over time). A Compliance Officer should be
designated (required in some cases) to create a culture of compliance.
3. Document and maintain key compliance related information
Your company should have an appropriate and well-organized record keeping
system (whether hard or soft copy). Documentation should include your written
policies and protocols (including previous and current versions), reports and
communications with authorities, and case files if needed.
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4. Scale your compliance program to be growth-ready
As your business expands to other cities, states, and countries, start reviewing the
agencies and regulations that may impact you. Consider legal counsel to navigate
potentially complex foreign regulations. A new array of risks accompanies cross-
border transactions, whether in the form of money, goods, or information.
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ROLE OF CS
A CS role in a start-up will contain responsibilities well beyond the traditional ones.
1. Preliminary
It would always start with incorporation and drafting the MoA and AoA and issue
of shares et all.
2. Funding
Start-ups go through a series of funding starting from seed capital to first round
and second round, each valuing the company at a different stage. The CS will have
to change the capital structure of the company to accommodate the fluctuating
equity based on the capital or provide a capital structure and options for the
venture capitalists which can work in an optimum manner for both, the promoters
as well as the funding entities.
3. Legal
A start-up will not be expected to have a fully functional secretarial as well as legal
team. Hence, all the legal work, starting from employee contracts to filing returns
and balance sheets, will have to be borne by the CS.
4. Liaising
The CS will have to take care of all administrative functions. Much of it includes
liaising with various entities such as CA’s, valuers, staffers, venture capitalists, IPR
practitioners etc.
5. Strategist
The CS has adequate knowledge of corporate strategies and will have to contribute
towards the business planning at par with the promoters.
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CONCLUSION
In order to put some direct emphasis on the youth entrepreneurship and new job
creation opportunities for the youths, Prime Minister Narendra Modi has announced
the complete action plan of this initiative on 16th of January in 2016. According to this
scheme, companies will be given incentives so that they can generate more
employment.
This initiative provides a facility of incentives for manufacturing units to generate more
jobs. Such initiatives are warm welcomed as they are very necessary to enhance the
economic growth, betterment of people’s lives and making India a developed country.
This initiative will be proved a new dimension to the entrepreneurship and help new
comers in setting up their businesses as well as make a live network of start-ups
through connection. Highly skilled and multi-talented youth of the country will be
completely benefitted through this campaign and able to generate new jobs.