Budget 2021: In welcome move for Indian startups, FM proposes one-person company without any restriction on paid-up limit
In a welcome move for Indian startups and MSMEs, Finance Minister Nirmala Sitharaman on Monday proposed the incorporation of one-person companies, with no restriction in paid-up capital and turnover, as well as an update to the definition of small companies under the Companies Act, 2013.
Presenting India's first-ever paperless Budget 2021, FM proposed revising the definition of small companies by raising the capital base to Rs 2 crore from the current limit of Rs 50 lakh.
The Budget 2021 also focussed on decriminalisation of limited liability partnerships, with the flexibility to convert a company to any form or LLP to benefit more than two lakh companies in easing the compliance requirement.
She added innovators would be allowed to form one-person companies without restrictions, paid-up capital, or turnover norms in a move welcomed by the startup ecosystem.
FM Sitharaman also announced the encouragement of increasing the number of entrepreneurs in India by reducing the residency limit for any Indian to 120 days.
"Incorporation of 1 person company allowed without any restriction on paid up limit is a welcome move for startups as 2 directors were nec at a minimum and founders were forced to co opt others under the companies Act," said Anup Jain, Managing Partner, Orios Venture Partners.
FM also announced the launch of data analytics, AI, ML driven MCA 3.0 version and an ecourt system to be implemented as a special framework for MSMEs.
Saurabh Srivastava, Co-founder, Indian Angel Network said, "Easing for one person companies and size of small businesses boost for startups. Margin money for stand up India 25 to 15 percent is a welcome move. One Nation- One Ration vision is an aspirational project benefitting 86 percent beneficiaries."
Earlier this morning, FM quoted poet and philosopher Rabindranath Tagore as she presented India’s first-ever paperless Budget 2021, considered one of the most crucial ones in modern India’s history as the country attempts to recover from the after-effects of the COVID-19 pandemic.
"Only three times, the budget has followed a contraction in the Indian economy. This time, it's because of a global pandemic like in other countries. I want to confidently state that the government is fully prepared to support and facilitate the economic reset," FM said as she presented a Budget that was based on six pillars.
(With inputs from PTI, Sohini Mitter, Meha Agarwal, and Team YourStory)
For YourStory's multimedia coverage of Budget 2021, visit YourStory's Budget 2021 page or budget.yourstory.com.