Tuesday, February 2, 2021

Proposal To Reduce Margin Money Requirement From 25-15 Percent For Start-Ups Is Welcome Move

Quotes from start-up founder Rohit Gawli, Chief Executive Officer of Lokal Kitchen, a food-tech start-up focused on marketing, selling, and delivering home-cooked meals to households and offices. 

"Compliance requirements for start-ups consume a lot of time, effort and resources. By proposing to reduce the margin money requirement from 25% to 15% for start-ups, I think our Government is really trying to acknowledge the need of easing up compliances to encourage more activity in this ecosystem. Moreover, the Finance Minister has also proposed to revise definition under Companies Act, 2013 for small companies by increasing their threshold for capitalization to not exceeding Rs 50 lakh to not exceeding Rs 2 crore and turnover not exceeding Rs 2 crore to not exceeding Rs 20 crore. Currently, a firm can only be labelled as a start-up if their annual turnover cap is of Rs 100 crore. Increasing this threshold will allow exemptions to companies to over Rs 100 crore and hence supporting them in their growth story. It would encourage further expansion of companies like these."

"Lastly, I am truly thrilled about the new initiative ‘one man show’ wherein one-person companies will be allowed now. There will be no restriction on paid-up capital and turnover, this will definitely incentivise more incorporation of one-person companies. This will also enable non-resident Indians to incorporate one-person companies in India. This initiative is an example of how our government truly understands that India needs more such reforms to support its budding entrepreneurship eco system."

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