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Labour, corporate affairs ministries move to help startups

The Labour Ministry has directed retirement fund body EPFO and health insurance provider ESIC to exempt startups from inspection and filing returns for 3 years.

In line with Prime Minister Narendra Modi’s vision to nurture startups, the ministry said in a set of directions last week that the new age ventures should be allowed to self-certify their compliance with 9 labour laws.

Labour Secretary Shankar Aggarwal in a letter said startups should not be inspected or asked to file returns for 3 years under 9 laws including Employees’ Provident Fund and Miscellaneous Provisions Act and the Employees State Insurance Act.

“Promoting startups would need special hand holding and nurturing. Thus, such ventures may be allowed to self-certify compliance with the Labour Laws,” he added.

They will be exempted from inspection under the Building and other Construction Workers (Regulation of Employment and Conditions of Service) Act, Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, Payment of Gratuity Act and Contract Labour Act.

Startups will also be exempted from filing returns under the Industrial Disputes Act, Building and other Construction Workers Act, Inter-State Migrant Workmen Act, Contract Labour Act, EPF Act and ESI Act.

There will be a blanket exemption from inspection and filing returns for the first year and would be asked to file an online self declaration form.

They will also not be asked to file return or inspected for the next two years, but will be inspected in case a “very credible and verifiable” complaint of violation is filed in writing and the approval has been obtained from the Central Analysis and Intelligence Unit (CAIU), Aggarwal said.

Except the EPF and Miscellaneous Provisions Act and the ESI Act, the implementation of other seven laws lies in both central and state government’s sphere.

Labour Ministry had directed its officials as well as the EPFO and ESIC to regulate inspection of startups, under laws which lie in the centre’s sphere.

Ease of doing business
Government will set up the Central Registration Centre (CRC) to speed up services for incorporation of companies as part of larger efforts to further improve ease of doing business in the country.

Apart from providing timely approvals, CRC will help ensure uniformity in application of rules and do away with discretion.

CRC, being established by the Corporate Affairs Ministry under the initiative of Government Process Re-engineering (GPR), will be formally operational from January 27.

It’s being launched with the specific objective of providing speedy incorporation-related services within stipulated timeframes which are in line with international best practices, an official release said on Monday.

GPR involves a three-pronged approach of further automating some of the approval processes.

This will be done by utilising advanced software tools and engines, rationalising and modifying some of the rules and engaging professionals to expedite the process of manual scrutiny.

“In the first phase, CRC will process applications for name availability (INC-1 e-forms) submitted online across the country and endeavour to process these by the end of next working day,” the release said.

More services will be rolled out progressively.

According to the release, the GPR exercise is in pursuance of the ministry’s objective of providing greater ‘ease of doing business’ to corporates.

“It is expected to result in speedier processing of incorporation-related applications, uniformity in application of rules and eradicating discretion. It will also be supplemented by intensive monitoring aimed at providing timely approvals,” the release added.

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