Lok Sabha Question No. 2188 (UNSTARRED), answered on 2023-08-02
Subject: Start up Ecosystem
Ministry: COMMERCE AND INDUSTRY
Asked by: Komati Reddy Venkat Reddy, Y. S. Avinash Reddy, Manne Srinivas Reddy

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY DEPARTMENT FOR PROMOTION OF INDUSTRY AND INTERNAL TRADE

## LOK SABHA

UNSTARRED QUESTION NO. 2188. TO BE ANSWERED ON WEDNESDAY, THE 02 ND  AUGUST, 2023.

## START UP ECOSYSTEM

## 2188.  SHRI KOMATI REDDY VENKAT REDDY:

SHRI Y.S. AVINASH REDDY:

SHRI MANNE SRINIVAS REDDY:

Will the Minister of COMMERCE AND INDUSTRY be pleased to state:

वाणिज्य एवं उद्योग मंत्री

- (a) whether the Government is taking steps to act as a facilitator to strengthen the start up ecosystem and not act as a regulator and if so, the details thereof along with  the  present  status  thereof  in  Telangana,  Karnataka,  Tamil  Nadu  and Andhra Pradesh;
- (b) whether the Government has held any start up 20 summits and if so, the details thereof since 2010 onwards till date and the response received in this regard;
- (c) the details of such start ups set up till now, State-wise; and
- (d) whether  the  Government  is  not  expected  to  start  regulating  or  dictating  or micromanaging the ecosystem and if so, the details thereof?

## ANSWER

## वाणिज्य एवं उद्योग मंत्रालय में राज्य मंत्री ( श्री सोम प्रकाश ) THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE & INDUSTRY (SHRI SOM PARKASH)

- (a): In  order  to  facilitate,  promote,  and  develop  a  strong  startup  ecosystem  for nurturing innovation, startups and entrepreneurship, the Government launched the Startup India initiative on 16th January 2016.

For  attaining  specific  targets,  various  programs  are  implemented  by  the Government  under  the  Startup  India  initiative  to  recognize,  develop,  and empower startups. Details of such programs implemented under the Startup India  initiative  by  the  Government  to  facilitate  holistic  growth  of  the  startup ecosystem across the nation are placed as Annexure-I

The  Government  is  also  spearheading  the  initiatives  under  ease  of  doing business  and  reducing  compliance  burden  which  are  aimed  at  creating  a conducive  business environment  and  reducing  regulatory  burden.  These initiatives extend greater ease to all entities/sectors/industries of the economy, including  startups.  Specifically  for  the startup  ecosystem,  57  such  key regulatory  reforms  have  been  undertaken  as  on 30th April 2023. The list of the reforms is placed at Annexure-II .

Sustained Government efforts in this direction have resulted in an increase in the number of recognised startups from about 400 in 2016 to 98,119 in 2023 (as on 30th April 2023).

The details of recognised startups in Telangana, Karnataka, Tamil Nadu, and Andhra Pradesh as on 30 th  April 2023 are as under:

| State          | No. of entities recognised startups by DPIIT   | as     |
|----------------|------------------------------------------------|--------|
| Telangana      |                                                | 5,157  |
| Karnataka      |                                                | 11,080 |
| Tamil Nadu     |                                                | 5,940  |
| Andhra Pradesh |                                                | 1,554  |

- (b): India  holds  the  Presidency  of  the  G20,  the  premier  global  forum for international economic cooperation, from 01 December 2022 to 30  November 2023.

The Startup20 Engagement Group has been initiated under the India's 2023 G20  Presidency  to  create  a  global  narrative  for  supporting  startups  and enabling synergies between  startups, corporates, investors, innovation agencies and other key ecosystem stakeholders.

The Startup20 Engagement Group included four meetings held in different regions of India and  served  as a platform for fostering innovations, collaborations, knowledge  sharing,  and  strategic  alliances  within  the  global startup ecosystem. The introductory inception meeting was held in Hyderabad, Telangana (on 28th- 29th January 2023). The second and third meetings of the engagement group were held in Gangtok, Sikkim (on 18 th -19 th March  2023)  and  Goa  (on  3 rd -4 th June  2023)  respectively  and  involved deliberations on the focus areas of the group. The main summit of Startup20 Engagement Group was held in Gurugram, Haryana (on 3 rd -4 th     July 2023). The deliberations of Startup20 Engagement Group served as an important platform for startup ecosystem, ecosystem builders, industry experts, Government, policymakers, and thought leaders to collaborate on a global scale.

- (c): The  State/UT-wise  details  of  startups  recognised  under  the  Startup  India initiative are placed as Annexure-III.
- (d): In view of the above, the question does not arise.

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## ANNEXURE-I

## ANNEXURE  REFERRED  TO  IN  REPLY  TO  PART  (a)  OF  THE  LOK  SABHA UNSTARRED QUESTION NO. 2188 FOR ANSWER ON 02.08.2023.

The  details  of  various  programs  undertaken  by  the  Government  to  promote startups across the country are as under:

1. Startup India Action Plan: An Action Plan for Startup India was unveiled on 16th January  2016.  The  Action  Plan  comprises  of  19  action  items  spanning  across areas such as 'Simplification and handholding', 'Funding support and incentives' and  'Industry-academia  partnership  and  incubation'.  The  Action  Plan  laid  the foundation of Government support, schemes and incentives envisaged to create a vibrant startup ecosystem in the country.
2. Fund of Funds for Startups (FFS) Scheme: The Government has established FFS with corpus of Rs. 10,000 crore, to meet the funding needs of startups. DPIIT is the monitoring agency and Small Industries Development Bank of India (SIDBI) is the operating agency for FFS. The total corpus of Rs. 10,000 crore is envisaged to  be  provided  over  the  14th  and  15th  Finance  Commission  cycles  based  on progress  of  the  scheme  and  availability  of  funds.  It  has  not  only  made  capital available for startups at early stage, seed stage and growth stage but also played a  catalytic  role  in  terms  of  facilitating  raising  of  domestic  capital,  reducing dependence on foreign capital and encouraging home grown and new venture capital funds.
3. Credit Guarantee  Scheme  for  Startups (CGSS): The Government  has established  the  Credit  Guarantee  Scheme  for  Startups  for  providing  credit guarantees  to  loans  extended  to  DPIIT  recognized  startups  by  Scheduled Commercial Banks, Non-Banking Financial Companies (NBFCs) and Venture Debt Funds  (VDFs)  under  SEBI  registered  Alternative  Investment  Funds.  CGSS  is aimed at providing credit guarantee up to a specified limit against loans extended by Member Institutions (MIs) to finance eligible borrowers viz. DPIIT recognised startups.
4. Regulatory Reforms: Over 50 regulatory reforms have been undertaken by the Government since 2016 to enhance ease of doing business, ease of raising capital and reduce compliance burden for the startup ecosystem.
5. Ease  of  Procurement: To  enable  ease  of  procurement,  Central  Ministries/ Departments are directed to relax conditions of prior turnover and prior experience in public procurement for all DPIIT recognised startups subject to meeting quality and technical specifications. Further, Government e-Marketplace (GeM) Startup Runway  has  been  developed  which  is  a  dedicated  corner  for  startups  to  sell products and services directly to the Government.
6. Support  for  Intellectual  Property  Protection: Startups  are  eligible  for  fasttracked patent application examination and disposal. The Government launched Start-ups Intellectual Property Protection (SIPP) which facilitates the startups to file applications for patents, designs and trademarks through registered facilitators in appropriate  IP  offices  by  paying  only  the  statutory  fees.  Facilitators  under  this Scheme are responsible for providing general advisory on diff¬erent IPRs, and information on protecting and promoting IPRs in other countries. The Government bears the entire fees of the facilitators for any number of patents, trademark or designs, and startups only bear the cost of the statutory fees payable. Startups are provided  with  an  80%  rebate  in  filing  of  patents  and  50%  rebate  in  filling  of trademark vis-a-vis other companies.
7. Self-Certification under Labour and Environmental laws: Startups are allowed to self-certify their compliance under 9 Labour and 3 Environment laws for a period of 3 to 5 years from the date of incorporation.
8. Income Tax Exemption for 3 years: Startups incorporated on or after 1st April 2016 can apply for income tax exemption. The recognized startups that are granted an Inter-Ministerial Board Certificate are exempted from income-tax for a period of 3 consecutive years out of 10 years since incorporation.
9. International Market Access to Indian Startups: One of the key objectives under the Startup India initiative is to help connect Indian startup ecosystem to global startup  ecosystems  through  various  engagement  models.  This  has  been  done though  international  Government  to  Government  partnerships,  participation  in international  forums  and  hosting  of  global  events.  Startup  India  has  launched bridges with over 17 countries that provides a soft-landing platform for startups from the partner nations and aid in promoting cross collaboration.
10. Faster Exit for  Startups: The  Government has notified  Startups  as  'fast  track firms' enabling them to wind up operations within 90 days vis-a-vis 180 days for other companies.
11. Startup India Hub: The Government launched a Startup India Online Hub on 19th June  2017  which  is  one  of  its  kind  online  platform  for  all  stakeholders  of  the entrepreneurial  ecosystem  in  India  to  discover,  connect  and  engage  with  each other.  The  Online  Hub  hosts  Startups,  Investors,  Funds,  Mentors,  Academic Institutions, Incubators, Accelerators, Corporates, Government Bodies and more.
12. Exemption for the Purpose Of Clause (VII)(b) of Sub-section (2) of Section 56 of the Act (2019): A DPIIT recognized startup is eligible for exemption from the provisions of section 56(2)(viib) of the Income Tax Act.
13. Startup India Showcase: Startup India Showcase is an online discovery platform for the most promising startups of the country chosen through various programs for startups exhibited in a form of virtual profiles. The startups showcased on the platform have distinctly emerged as the best in their fields. These innovations span

across  various  cutting-edge  sectors  such  as  Fintech,  EntrepriseTech,  Social Impact,  HealthTech,  EdTech, among others. These startups are solving critical problems  and  have  shown  exceptional  innovation  in  their  respective  sectors. Ecosystem  stakeholders  have  nurtured  and  supported  these  startups,  thereby validating their presence on this platform.

14. National Startup Advisory Council: The Government in January 2020 notified constitution of the National Startup Advisory Council to advise the Government on measures needed to build a strong ecosystem for nurturing innovation and startups in  the  country  to  drive  sustainable  economic  growth  and  generate  large  scale employment  opportunities.  Besides  the  ex-officio  members,  the  council  has  a number  of  non-official  members,  representing  various  stakeholders  from  the startup ecosystem.
15. Startup  India:  The  Way  Ahead: Startup  India:  The  Way  Ahead  at  5  years celebration of Startup India was unveiled on 16th January 2021 which includes actionable plans for promotion of ease of doing business for startups, greater role of technology in executing various reforms, building capacities of stakeholders and enabling a digital Aatmanirbhar Bharat.
16. Startup India Seed Fund Scheme (SISFS): Easy availability of capital is essential for  entrepreneurs  at  the  early  stages  of  growth  of  an  enterprise.  The  capital required at this stage often presents a make-or-break situation for startups with good business ideas. The Scheme aims to provide financial assistance to startups for  proof  of  concept,  prototype  development,  product  trials,  market  entry  and commercialization. Rs. 945 crore has been sanctioned under the SISFS Scheme for period of 4 years starting from 2021-22.
17. National  Startup  Awards  (NSA): National  Startup  Awards  is  an  initiative  to recognize  and  reward  outstanding  startups  and  ecosystem  enablers  that  are building  innovative  products  or  solutions  and  scalable  enterprises,  with  high potential of employment generation or wealth creation, demonstrating measurable social impact. Handholding support is provided to all the finalists across various tracks viz. Investor  Connect,  Mentorship,  Corporate  Connect,  Government Connect, International Market Access, Regulatory Support, Startup Champions on Doordarshan and Startup India Showcase, etc.
18. States' Startup Ranking Framework (SRF): States' Startup Ranking Framework is a unique initiative to harness strength of competitive federalism and create a flourishing startup ecosystem in the country. The major objectives of the ranking exercise  are  facilitating  states  to  identify,  learn  and  replace  good  practices, highlighting the policy intervention by states for promoting startup ecosystem and fostering competitiveness among states.
19. Startup Champions on Doordarshan: Startup Champions program on Doordarshan is a one-hour weekly program covering stories of award  winning/ nationally recognised startups. It is telecasted in both Hindi and  English across Doordarshan network channels.
20. Startup  India  Innovation  Week: The  Government  organises  Startup  India Innovation  week  around  the  National  Startup  Day  i.e.,  16th  January,  with  the primary  goal  was  to  bring  together  the  country's  key  startups,  entrepreneurs, investors, incubators, funding entities, banks, policymakers, and other national/international  stakeholders  to  celebrate  entrepreneurship  and  promote innovation.
21. The Startup India Investor Connect Portal has been co-developed under the Startup India Initiative with SIDBI, serving as an intermediary platform that links startups  and  investors  in  order  to  help  entrepreneurs  from  various  industries, functions, stages, regions, and backgrounds in mobilizing capital. The portal has been  built  with  the  aim  to  enable  in  particular;  early-stage  startups  located anywhere in the country to showcase themselves to leading investors/ venture capital funds. Currently, 82 Alternative Investment Funds (AIFs) and more than 1,900 startups have already registered on the platform.
22. National  Mentorship  Portal  (MAARG) :  In  order  to  facilitate  accessibility  to mentorship  for  startups  in  every  part  of  the  country,  the  Mentorship,  Advisory, Assistance, Resilience, and Growth (MAARG) program has been developed and launched under the Startup India Initiative.
23. ASCEND: Under ASCEND (Accelerating Startup Caliber & Entrepreneurial Drive), sensitization workshops on startups and entrepreneurship were conducted for all eight North Eastern States with the objective to capacitate and augment knowledge on key aspects of entrepreneurship and continue efforts towards creating a robust startup ecosystem in these States.
24. Startup20 Engagement Group: As a result of India's belief in startup ecosystem, a  Startup20  Engagement  Group  under  India's  G20  Presidency  has  been institutionalised which is working towards harmonisation and cross collaboration amongst the largest global economies. The engagement group acts as the voice of  the  global  startup  ecosystem  bringing  together  varied  stakeholders  on  a common  platform.  The  group  aims  to  support  startups  by  enabling  synergies between  startups,  corporates,  investors,  innovation  agencies  and  other  key ecosystem stakeholders internationally and to create global synergies.

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## ANNEXURE-II

## ANNEXURE REFERRED TO IN REPLY TO PART (a) OF THE LOK SABHA UNSTARRED QUESTION NO. 2188 FOR ANSWER ON 02.08.2023.

## 57 key regulatory reforms undertaken for the startup ecosystem are as under:

## Reserve Bank of India

1.  Startup  enterprises  permitted  to  access  loans  under  External  Commercial  Borrowing Framework up to USD 3 million. (Oct, 2016)
2. A  Securities  and  Exchange  Board  of  India  (SEBI)  registered  Foreign  Venture  Capital Investor (FVCI) may contribute up to 100%of the capital of an Indian company engaged in  any  activity  mentioned  in  Schedule  6  of  Notification  No.  FEMA  20/2000,  including startups irrespective of the sector in which it is engaged, under the automatic route. (Aug, 2017)
3.  An Indian startup having an overseas subsidiary, may open a foreign currency account with a bank outside India for the purpose of crediting to it foreign exchange earnings out of exports/ sales made by the said entity and/ or the receivables, arising out of exports/ sales, of its overseas subsidiary. (June, 2016)
4.  SOFTEX form filed by software exporters moved online. (Feb, 2019)
5.  Under FDI Policy, tenure of Startup has been aligned with DPIIT Notification dated 19th February,2019 for the purpose of definition of convertible notes. (March 2022)
6.  RBI has rationalised the reporting process in Single Master Form (SMF) on FIRMS Portal for Foreign Investment in India. (January 2023)

## Securities and Exchange Board of India (SEBI)

7.  Lock in period for investments made by an Angel Fund reduced to 1 year from 3 years as amended by the SEBI (Alternative Investment Funds) (Amendment) Regulations,2016, w.e.f. 04-01-2017.
8.  Angel Funds are allowed to invest in overseas venture capital undertakings upto 25% of their  investible  corpus  in  line  with  other  AIFs  as  provided  by  the  SEBI  (Alternative Investment Funds) (Amendment) Regulations, 2016, w.e.f. 04-01-2017.
9.  The upper limit for number of angel investors in a scheme is increased from forty nine to two  hundred  as  amended  by  SEBI  (Alternative  Investment  Funds)  (Amendment) Regulations, 2016,w.e.f. 04-01-2017
10.  The requirements of minimum investment amount by an Angel Fund in any venture capital undertaking  is  reduced  from  fifty  lakhs  to  twenty  five  lakhs  as  amended  by  SEBI (Alternative Investment Funds) (Amendment) Regulations, 2016,w.e.f. 04-01-2017
11.  'Operating Guidelines for Alternative Investment Funds in International Financial Services Centres' issued by SEBI. (Nov, 2018)
12.  Under  AIF  Regulations,  definition  of  Startup  has  been  aligned  with  DPIIT  Notification dated 19 th  February,2019 for the purpose of investment by Angel Funds in Startups (5 th May,2021)
13.  The  SEBI  (Alternative  Investment  Fund)  (Second  Amendment)  Regulations  2021 removes the list of restricted activities or sectors from the definition of Venture Capital Undertaking i.e. Category 1 AIFs can now invest in NBFCs.  (5 th  May 2021)

## Ministry of Corporate Affairs

14.  The financial statement, with respect to private company (if such private company is a start-up) may not include the cash flow statement. (June, 2017)
15.  A private company, which is considered as a start-up for a period of five years from the date of its incorporation, is also allowed to accept deposits from members without any restriction on the amount. (Sep, 2017)
16.  Startup defined for the purpose of Companies Act, 2013: As per the definition, a start-up company means a private company incorporated under the Companies Act, 2013 and recognised as a 'start-up' in accordance with the notification issued by the Department for Promotion of Industry and Internal Trade. (June, 2017)
17.  Exemption from procedural compliance (e.g. such as issue of an offer circular or creation of a deposit repayment reserve) for raising deposits from shareholders. (June, 2017)
18.  In relation to a private company (if such private company is a startup), the annual return shall be signed by the Company Secretary, or where there is no Company Secretary, by the Director of the company. (June, 2017)
19.  A private company (if such private company is a startup) is required to conduct at least one meeting of the Board of Directors  in each half of a calendar year and the gap between the two meetings is not less than ninety days. (June, 2017)
20.  Name Reservation for Company incorporation: Rule 8, Companies (Incorporation) Rules, 2014  substituted  with  Companies  (Incorporation)  5th  Amendment  Rules,  2019,which provides  for  new  regulations  on  resemblance  with  an  existing  company  name,  new categories of undesirable names of a company and list of words which can be used only after obtaining approval. (May, 2019)
21.  Amendment in Companies (Share Capital and Debentures) Rules, 2014: The Ministry of Corporate Affairs issued a notification on 16th August, 2019 increasing the period in which ESOPs could be granted to promoters and directors (holding more than 10% equity) of Startups, from 5 years to 10 years from the date of incorporation and thereby aligned the provisions of the Companies (Share Capital and Debentures) Rules with the provisions referred to in the DPIIT notification dated 19th Feb, 2019.

The notification also enhanced the limit on shares with Differential Voting Rights in the Company from 26% of the total post-issue paid up equity capital of the Company to 74% of the total voting power. Further, the condition for the company to have consistent track record of distributable profits for the last three years for issue of DVR shares has been removed. (August 2019)

22.  Corporate Social Responsibility Funds: In reference to section 135 of the Companies Act 2013, Schedule VII has been amended to include  Contribution to incubators funded by Central Government or State Government or any agency or Public Sector Undertaking of Central Government or State Government, and contributions to public funded Universities, Indian Institute of Technology (IITs), National Laboratories and Autonomous Bodies (established under the auspices of Indian Council of Agricultural Research (ICAR),

Indian Council of Medical Research (ICMR), Council of Scientific and Industrial Research (CSIR),  Department  of  Atomic  Energy  (DAE),  Defence  Research  and  Development Organisation  (DRDO),  Department  of  Science  and  Technology  (DST),  Ministry  of Electronics  and  Information  Technology)  engaged  in  conducting  research  in  science, technology,  engineering  and  medicine  aimed  at  promoting  Sustainable  Development Goals (SDGs). (October 2019).

23.  As part of Government of India's Ease of Doing Business (EODB) initiatives, the Ministry of  Corporate  Affairs  has  launched  a  new  integrated  Web  Form  christened  'SPICe+' replacing the existing SPICe form. SPICe+ would offer 10 services by 3 Central Govt Ministries & Departments (Ministry of Corporate Affairs, Ministry of Labour & Department of Revenue in the Ministry of Finance) and One State Government(Maharashtra), thereby saving as many procedures, time and cost for Starting a Business in India and would be applicable for all new company incorporations w.e.f.23rd February 2020. SPICe+ has two parts: Part A-for Name reservation for new companies and Part B offering a bouquet of services viz. (i) Incorporation (ii) DIN allotment (iii) Mandatory issue of PAN (iv) Mandatory issue  of  TAN  (v)  Mandatory  issue  of  EPFO  registration  (vi)  Mandatory  issue  of  ESIC registration  (vii)  Mandatory  issue  of  Profession  Tax  registration(Maharashtra)  (viii) Mandatory Opening of Bank Account for the Company and (ix) Allotment of GSTIN (if so applied for) (February 2020)
24.  Amendment in Companies (Share Capital and Debentures) Rules, 2014: The Ministry of Corporate Affairs issued a notification on 05th June, 2020 increasing the period in which Sweat Equity shares, from 5 years to 10 years from the date of incorporation and thereby aligned the provisions of the Companies (Share Capital and Debentures) Rules with the provisions referred to in the DPIIT notification dated 19th Feb, 2019. (June 2020)
25.  Amendment  in  Companies  (Acceptance  of  Deposits)  Rules,  2014:  The  Ministry  of Corporate Affairs issued a notification on 07th September, 2020 increasing the period of issuance of convertible note, from 5 years to 10 years from the date of issue and thereby aligned the provisions of the Companies (Acceptance of Deposits) Rules, 2014 with the provisions referred to in the DPIIT notification dated 19th Feb, 2019. (September 2020)
26.  Amendment  in  Companies  (Acceptance  of  Deposits)  Rules,  2014:  The  Ministry  of Corporate Affairs issued a notification on 07th September, 2020 whereby the maximum limit in respect of deposits to be accepted from members by a private company shall not apply to a start-up company for 10 years from the date of its incorporation, instead of 5 years. (September 2020)
27.  Incorporation of One Person Companies (OPCs) by allowing OPCs to grow without any restrictions on paid up capital and turnover, allowing their conversion into any other type of company at any time, reducing the residency limit for an Indian citizen to set up an OPC from 182 days to 120 days and also allow Non-Resident Indians (NRIs) to incorporate OPCs in India. (February 2021)
28.  Amendment in Insolvency and Bankruptcy Code, 2016: The Ministry of Corporate Affairs issued a notification on 30th August, 2022 harmonizing the definition of startup with the DPIIT notification dated 19 th  February 2019. (August 2022)

## Ministry of Finance Department of Revenue

29.  In the case of a domestic company, where its total turnover or the gross receipt in the previous year does not exceed two hundred and fifty crore rupees, income tax shall be charged at the rate of 25 percent of the total income. (Feb, 2018)
30.  Definition of eligible business as stated in Section 80-IAC aligned with Startups definition. (April, 2018)
31.  Introduction of Section 54EE in the Income Tax Act, 1961: Exemption from tax on longterm capital gain if such long-term capital gain is invested in a fund notified by Central Government. The maximum amount that can be invested is Rs 50 lakh. (May, 2016)
32.  Amendment in Section 54GB of Income Tax Act: Exemption from tax on capital gains arising out of sale of residential house or a residential plot of land if the amount of net consideration  is  invested  in  prescribed  stake  of  equity  shares  of  eligible  Startup  for utilizing the same for purchase of specified asset. (Feb, 2016)
33.  Minimum Alternate Tax credit allowed to be carried forward up to fifteenth assessment years instead of ten assessment years. (2017)
34.  Exemption under section 80-IAC of Income Tax Act: Exemption to eligible Startup for any 3 consecutive assessment years out of 7 years (earlier 5 years) beginning from the year in which such eligible Startup is incorporated.(April, 2018)
35.  Exemption from tax under the provisions of section 56(2)(viib) to Startups for issue of shares above fair market value on the basis of a self-declaration to the Central Board of Direct Taxes. The aggregate amount of paid up share capital and share premium of the startup after issue or proposed issue should not exceed Rs. 25 Crore (Feb, 2019)
36.  Taxation of convertible notes - Period for which a bond, debenture, debenture-stock or deposit certificate was held prior to conversion shall be considered for determining the period of holding of such shares or debentures acquired upon conversion. (March, 2016)
37.  Amendment in Section 54GB of Income Tax Act w.e.f 1 st  April 2020: (August 2019)
- i. The condition of minimum holding of 50% of share capital or voting rights in the start-up relaxed to 25%
- ii. Extension  of  period  under  which  benefit  under  section  54GB  from  for  sale  of residential property can be availed up to 31st March, 2021
- iii. Condition restricting transfer of new asset being computer or computer software is to relaxed from 5 years to 3 years w.e.f. 1-4-2020
38.  Amendment in Section 79 of Income Tax Act (August 2019): Eligible Startups to carry forward their losses on satisfaction of any one of the two conditions:
- i. Continuity of 51% shareholding/voting power or
- ii. Continuity of 100% of original shareholders carrying voting power
39.  Pass through of losses allowed to Investment Funds i.e. Category I and II AIF similar to pass through of income. These amendments will take effect from the 1st April, 2020 and

will,  accordingly,  apply  in  relation  to  the  assessment  year  2020-21  and  subsequent assessment years (August 2019)

40.  The  investment  made  by  Venture  Capital  Fund  of  Category-I  AIF  in  a  startup  was exempted from the applicability of the provisions of section 56(2)(viib) of the IT Act. This exemption has been extended to all sub-categories of Category-I AIF and Category-II AIF via introduction of 'specified funds' in the said section (August 2019)
41.  The Finance Act 2020 provides for amendment in section 80-IAC of the Income-tax Act relating to special provision in respect of specified business. The provisions of section 80IAC, inter alia, provide for a deduction of an amount equal to hundred per cent. of the profits  and  gains  derived  from  an  eligible  business  by  an  eligible  start-up  for  three consecutive assessment years out of ten years vis-à-vis the earlier norm of seven years at  the  option  of  the  assessee  and  the  total  turnover  of  its  business  does  not  exceed hundred crore rupees in the previous year relevant to the assessment year for which deduction under this section is claimed. This amendment will take effect from 1st April, 2021  and  will,  accordingly,  apply  in  relation  to  the  assessment  year  2021-2022  and subsequent assessment years. (Feb 2020).
42.  The Finance Act 2020 provides for amendment in section 80-IAC of the Income-tax Act relating to special provision in respect of specified business. The provisions of section 80IAC, inter alia, provide for a deduction of an amount equal to hundred per cent. of the profits  and  gains  derived  from  an  eligible  business  by  an  eligible  start-up  for  three consecutive assessment years out of ten years at the option of the assessee and the total turnover of its business does not exceed hundred crore rupees vis-à-vis the earlier norm of twenty-five crore rupees in the previous year relevant to the assessment year for which deduction under this section is claimed. This amendment will take effect from 1st April, 2021  and  will,  accordingly,  apply  in  relation  to  the  assessment  year  2021-2022  and subsequent assessment years. (Feb 2020)
43.  The  Finance  Act  2020  provides  for  amendment  in  sections  156,  191  and  192  of  the Income Tax Act laying to enable employees receiving specified security or sweat equity share as perquisite under section 17(2)(vi) of an eligible startup referred to in section 80IAC, to deduct or pay, as the case may be, tax on such income within fourteen days after the expiry of forty-eight months from the end of the relevant assessment year; or from the date of the sale of such specified security or sweat equity share by the assessee; or from the date of the assessee ceasing to be the employee of the person, whichever is earlier, on the basis of rates in force of the financial year in which the said specified security or sweat equity share is allotted or transferred. This amendment will take effect from 1st April, 2020. As per the earlier norms, the said perquisite including ESOPs were taxed in the hands of the employee at the time of exercise of the option. (Feb 2020)
44.  The Finance Bill 2021 provides for extension of the eligibility period to claim tax holiday for the startups by one more year. (Feb 2021)
45.  The  Finance  Bill  2021  provides  for  extension  of  claiming  Capital  gains  exemption  for investment in startups by one year i.e. till 31 March, 2022. (Feb 2021)
46.  The Finance Bill 2022 provides for extension of the eligibility period to claim tax holiday for the startups by one more year. (Feb 2022)
47.  The Finance Bill 2022 capped the surcharge on the long term capital gain at 15% for unlisted companies from existing 37%. The effective rate of tax has been reduced from 28.5% to 23.9%. (Feb 2022)
48.  The Finance Bill 2023 provides for extension of the eligibility period to claim tax holiday for the startups by one more year. (Feb 2023)
49.  The Finance Bill 2023 enables startups to set off and carry forward losses for a period of 10 years vis-a-vis 7 years under section 79 of the Income Tax Act 1961. (Feb 2023)
50.  The Finance Bill 2023 capped the surcharge on the long term capital gain at 25% for unlisted companies from existing 37% under the new tax regime. The effective rate of tax has been reduced from 42.74% to 39.0%. (Feb 2023)

## Department of Economics Affairs

51.  The Ministry of Finance now allows non-government provident funds, superannuation, and gratuity funds to invest up to 5 percent of their investible surplus in Category I and II Alternate Investment Funds (AIFs) registered with SEBI. (March 2021).

## Insurance Regulatory and Development Authority

52.  The  Insurance  Regulatory  and  Development  Authority  of  India  (IRDAI)  has  allowed insurance  companies  to  invest  in  Fund-of-Funds  (FoF)  that  invest  within  the  country subject to certain conditions. (April 2021).

## Department of Expenditure

53.  Harmonization of Startup Definition under the Manual for Procurement of Consultancy and other Services with the DPIIT notification dated 19 th  February 2019.

## Ministry of Labour and Employment

54.  The Ministry of Labour and Employment now allows EPFO to invest up to 5 percent of their investible surplus in Category I and II Alternate Investment Funds (AIFs) registered with SEBI. (April 2021)

## Ministry of Electronics and Information Technology

55.  Removal of clause from Electronic Development Fund (EDF) operating guidelines stating that if a fund draws from Fund of Funds for Startups, then they cannot draw from EDF and vice versa. (Nov, 2018)

## Ministry of Commerce and Industry, Department for Promotion of Industry and Internal Trade

56.  Amendment in the definition of a Startup: An entity shall be considered as a Startup upto a period of ten years from the date of incorporation/ registration and turnover of the entity for  any  of  the  financial  years  since  incorporation/  registration  has  not  exceeded  one hundred crore rupees. (Feb, 2019)
57.  Ministry of Commerce and Industry, Department for Promotion of Industry and Internal Trade vide Gazette Notification No. G.S.R. 646(E). dated 21st September 2021 amended the  Patent  Rules.  The  Patent  Rules  have  now  extended  the  benefits  related  to  80% reduced fee for patent filing & prosecution to Educational institutions as well. (Sept 2021).

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## ANNEXURE-III

## ANNEXURE REFERRED TO IN REPLY TO PART (c) OF THE LOK SABHA UNSTARRED QUESTION NO. 2188 FOR ANSWER ON 02.08.2023.

## The state-wise details of startups recognised under the Startup India initiative as on 30 th  April 2023:

| States/UTs                               | No. of recognised startups   |
|------------------------------------------|------------------------------|
| Andaman and Nicobar Islands              | 43                           |
| Andhra Pradesh                           | 1,554                        |
| Arunachal Pradesh                        | 25                           |
| Assam                                    | 879                          |
| Bihar                                    | 1,774                        |
| Chandigarh                               | 335                          |
| Chhattisgarh                             | 1,017                        |
| Dadra and Nagar Haveli and Daman and Diu | 41                           |
| Delhi                                    | 10,812                       |
| Goa                                      | 391                          |
| Gujarat                                  | 7,357                        |
| Haryana                                  | 5,161                        |
| Himachal Pradesh                         | 317                          |
| Jammu and Kashmir                        | 540                          |
| Jharkhand                                | 908                          |
| Karnataka                                | 11,080                       |
| Kerala                                   | 4,251                        |
| Ladakh                                   | 7                            |
| Lakshadweep                              | 2                            |
| Madhya Pradesh                           | 3,010                        |
| Maharashtra                              | 17,981                       |
| Manipur                                  | 108                          |
| Meghalaya                                | 32                           |
| Mizoram                                  | 15                           |
| Nagaland                                 | 39                           |
| Odisha                                   | 1,783                        |
| Puducherry                               | 95                           |
| Punjab                                   | 1,006                        |
| Rajasthan                                | 3,290                        |
| Sikkim                                   | 10                           |
| Tamil Nadu                               | 5,940                        |
| Telangana                                | 5,157                        |
| Tripura                                  | 82                           |
| Uttar Pradesh                            | 9,058                        |
| Uttarakhand                              | 814                          |
| West Bengal                              | 3,205                        |
| Grand Total                              | 98,119                       |

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