iSPIRIT Expert Team on Incubators submitted their wishlist. Some recommendations:
1. Incubators should be recognized and notified as “Single Window Clearance” point for starting and closing a business, set up by Incubatee companies. New provisions could be incorporated in the Companies Act to establish such procedures, with time limits.
2. The Incubators be exempt from: a) Income Tax under the applicable sections of IT Act, b) Customs Duty or any other applicable taxes for import of equipments, consumables, raw material, components and spares up to a limit of Rs. 20 crore ad valorem, and c) CST / Excise / VAT or any other applicable taxes for purchase of goods required for the Incubator.
3. “Donors” who contribute funds to the Incubator for furtherance of the objects of the Incubator should be eligible for 200% tax benefits as currently applicable to R&D investments. As an additional motivation, the benefit of such an investment can be carried forward for three successive assessment years.
4.The Incubators currently run SEED Funds given by the Government which are at present less than Rs. 5 crore per Incubator and with an investment cap 1. of Rs. 50 lakh per enterprise. These being risky investments, the gains made out of successful exits, should be tax exempt as these resources are redeployed for investment, similar to the current pass through status accorded to VC’s.
5. The Incubators should be recognised as crowd funding platforms under SEBI. The SEBI should work with Incubators to workout modalities in this regard.
6. The Incubators should be authorised and empowered to approve and notify Incubatee Companies to avail of the benefits extended from time to time.
7. To be considered as par with SEBI approved Investors as per provisions in Section 56(2).
8. There is a restriction on compensation/salary of CEO/MD of Section 25 (Sec 8) companies which is grossly inadequate. This must be raised to a minimum of Rs.2 lakh per month and can be made applicable to the approved Technology Business Incubators.