MCA relaxes startup by amending norms related to incorporation fee and shifting of office

SA TeamJanuary 26, 2019

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Key Highlights

MCA has extempted incorporation fee for startups having share capital up to Rs 15 lakh from 10 lakh.

Startups can shift their registered office from one state to another state by advertising the notice in office in a vernacular newspaper and English newspaper.

New rules are effective from March 18, 2019.

Government is continuously encouraging entrepreneurs to step forward and build a start-up to assist India in becoming economically and socially sound. Few days before the Indian Government have relaxed rules of Angle Tax and recently it has again taken a step to scale up enthusiast of startups and accelerate their business in India. The Ministry of Corporate Affairs has exempted incorporation fee for startups having share capital up to Rs. 15 lakh. Previously only companies having share capital up to Rs. 10 Lakh were exempted from incorporation fee and they only need to pay for stamp duty. The new rules are effective from March 18, 2019.

MCA also amended rules for shifting of registered office from one state to another state. As according to reformed rules any company who wishes to shift their Registered office from one state to another state can do so by advertising the notice of shifting registered office in a vernacular newspaper in the principal vernacular language in the district and in the English language in an English newspaper with the wide circulation.

Previously the startups need to release a notice of shifting of registered office in the widest circulated newspaper, which in case of failure used to result in the unnecessary delay of 4-5 months in the completion of the procedure. These amendments are made by MCA for easing the business of startups and SMEs. The notification stating amendment to the Companies (Incorporation) Rules, 2014 is notified in the first week of March.

According to a notification of the Income Tax Department, about 120 startups, out of 150 applied for tax relief, have got the exemption from Section 56 (2) viib of the Income-Tax Act, 1961. The remaining startups will also get relief soon once flaws in their applications are corrected.

According to notification of DPIIT in February, consideration received by the eligible startup for shares issued or proposed to be issued will be exempt up to an aggregate limit of Rs 25 crore. Startups were asked to file a duly signed declaration with DPIIT for availing the exemption.

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