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Start-Up Laws in India

Start-Up Industry in India

India is often called out for being the fastest growing Start-Up ecosystem. The launch of the ‘Start-Up India’ campaign followed by the Action Plan and the ‘Scheme for Facilitating Start-Ups Intellectual Property Protection’ is slated to make the environment more efficient and conducive to by removing regimes that are exhaustive and prone to corruption. The Start-Up industry of India, which has already been driven by factors such as massive funding, consolidation activities, evolving technology and a burgeoning domestic market, is likely to evolve with these new introductions. India has recently witnessed a set of these entities successfully making their way through the cut throat competition from corporate giants established decades ago. However, in light of the new conducive environment, these entities in India are likely to have more success stories in the coming days.

Definition of a Start-Up

For the purposes of the Scheme for Facilitating Start-Ups Intellectual Property Protection (SIPP), a start-up has been defined as an entity, incorporated or registered in India not prior to five (5) years, with an annual turnover not more than INR 25 Crores (250 Million) in any preceding financial year, working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property. The Start-Up must also be certified by the Start-Up Certification Board as having an innovative business.

Start-Up Laws in India

For starting any new business, one of the stepping stones is knowing the basics of the Start-Up laws in the country. Some of the basic laws a Start-Up must consider are:

  • Incorporation – The very first step in launching a Start-Up is to decide the kind of business venture it is, followed by its incorporation as per existing Company laws.
  • Accounting and Tax laws – Different sectors have diverse tax laws, and these laws keep changing from time to time, depending upon the different policies adopted. The applicable tax laws usually depend upon the geographical region where the start-up is based and the nature of its business.
  • Labour laws – As the Start-Up may eventually have to hire employees, whether on a consultancy basis or otherwise, it is advisable to look into compliances under the labour legislations.
  • SEBI regulations – The Security Exchange Board of India (SEBI) releases notifications from time to time which may have to be complied with.
  • IT Laws – Living in a technologically advanced era may demand concepts like e-contracts, cloud computing, digital signatures, securing confidential data from hackers, protecting privacy digitally etc. Therefore, knowing the IT laws may be extremely important.
  • Contract Laws – At one time or another, Start-Ups will require to get into various contracts with various stake-holders in the course of business, which shall be governed by the prevalent contract laws.
  • Intellectual Property Laws – Legal protection of intellectual property is of supreme importance to any business entity, including Start-Ups. Timely IP audits, filing appropriate applications for trademark, copyright, patent, design claims etc. will not only protect the business from dilution but also increase its profits. Intellectual Property Rights for Start-Ups in India

Additionally, in tune with the ‘Start-Up India’ campaign, 19 new plans have been introduced for Start-Ups in India. The ones having legal relevance are self-certification which will apply to laws such as payment of gratuity, labour contracts, provident fund management, water and air pollution acts, Patent protection which is basically a fast-track system for patent examination at lower costs etc. As far as taxation laws are concerned, there is no Capital gains tax or income tax for a span of 3 years, besides tax exemptions for investments of value higher than the market price. Further, norms of public procurement and rules of trading have been simplified to a considerable extent. Even the winding up process for Start-Ups is simple as the new Insolvency and Bankruptcy Code, 2015 has provisions for the fast track and/ or voluntary closure of businesses.

For more information on the regulation of Start-Up in India, please write to us at info@ssrana.com or submit a query.

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Start Up Laws in India

For more information please contact us at : info@ssrana.com