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New Delhi : Under Startup India Initiative recognized startups have been exempted under several sections of IT Act. The Fund of Funds for Startups (FFS) was approved by the Cabinet and established by Department for Promotion of Industry and Internal Trade (DPIIT) in June 2016 with a corpus of Rs 10,000 crore to provide a much needed boost to the Indian startup ecosystem and enable access to domestic capital.
The objectives of Fund of Funds include accelerating innovation driven entrepreneurship and business creation, mobilising larger equity-like resources for startups. The Fund of Funds does not directly invest in start-ups but provides capital to SEBI-registered Alternate Investment Funds (AIFs), known as daughter funds, who in turn invest money in growing Indian startups through equity and equity-linked instruments. SIDBI has been given the mandate of managing this Fund through selection of suitable daughter funds and overseeing the disbursal of committed capital.
As on November 21, 2019, SIDBI has committed Rs 3,123.20 crore. to 47 SEBI registered Alternative Investment Funds (AIFs). These funds have raised a corpus fund of Rs 25,728 crore. Rs 695.94 crore have been drawn from the Fund of Funds for start-ups. Rs. 2,669.83 crore have been invested into 279 startups. There is no provision for State/UT-wise distribution of funds under FFS. Altogether 2,85,890 jobs were reported by 23,657 DPIIT recognized start-ups, as on December4, 2019.
The Inter-Ministerial Board of Certification is a Board set up by Department for Promotion of Industry and Internal Trade (DPIIT) which validates Startups for granting tax related benefits.
A DPIIT recognized Startup is eligible to apply to the Inter-Ministerial Board for full deduction on the profits and gains from business (exemption under Section 80IAC of the Income Tax Act) provided the following conditions are fulfilled. The entity should be: A private limited company or a limited liability partnership, Incorporated on or after April 1, 2016, but before 1st April 1, 2021, and Products or services or processes are undifferentiated, have potential for commercialisation and have significant incremental value for customers or workflow.The deduction is for any three consecutive years out of seven years from the year of incorporation of start-up.
Till date, 38 Inter-Ministerial Board meetings have taken place and 247 startups have been granted exemption under Section 80IAC of the IT Act. This information was given by Commerce and Industry Minister Piyush Goyal in a written reply in Lok Sabha on December 11, 2019, according to a PIB release.