Startup India Registration
Startup India Recognition
Startup India is an Indian Government initiative that is intended to build a strong eco-system for nurturing innovation and startups in the country to drive sustainable economic growth and generate large scale employment opportunities. Through this initiative, the government aims to empower Startups to grow through innovation and design.
The objectives of the Startup India Movement are outlined below. The action plan envisages supporting the startups and more:
- Enhanced infrastructure, including incubation centres
- IPR facilitation, including easier patent filing
- The better regulatory environment, including the tax benefits, easier compliance, improved setting up of a company, fastest mechanism and more.
- A goal to increase the funding opportunities
- Provide a vast networking database for the entrepreneurs and other stakeholders in the startup ecosystem.
Benefits of Startup India Scheme
Income Tax Benefits
Startups are now given an income tax exemption for a period of three years from the date of incorporation provided they are certified as such by the Inter-Ministerial Board of Certification. Also, upon obtaining recognition from the DPIIT (Department for Promotion of Industry and Internal Trade), and if the aggregate amount of paid-up share capital and share premium of the startup after the proposed issuing of shares, if any, does not exceed INR 25 Crore, the startup will also be exempt from capital gains tax under Section 56 of the Income-tax Act,1961-2014.
Financial Benefits
Startups are given a rebate on intellectual property rights (IPR) costs of 80% on patents and 50% on trademarks and are actively assisted by government-provided facilitators who aid with protecting and commercializing the IPRs. The examination and disposal of the IPR applications are also fast-tracked. The government will also pay the fees of the facilitators.
Registration Benefits
Startup registration in India is still extremely complex, with incorporation and registration being considered more difficult than the actual running of a business due to the arduousness of the requirements. Under the scheme, the Startup India Hub, a portal to create networking opportunities and assistance for startups, has been created with a problem-solving window being provided by the government under the scheme.
Funding Benefits
Certain states provide seed funding to startups certified under the scheme. To know about your state and the requirements in place, click here.
Regulatory Benefits
Under the Startup India Scheme, startups are allowed to self-certify compliance for six labour laws and three environmental laws through a simple online procedure. For labour laws, no inspections will be conducted for a period of 5 years unless there is a credible and verifiable complaint of violation, filed in writing, and approved by an official who is at least one level senior to the inspecting officer. In the case of environmental laws, startups that fall under the ‘white category’ (as defined by the Central Pollution Control Board) would be able to self-certify compliance, and only random checks would be carried out in such cases
Public Procurement Benefits
Once your startup is certified by the Inter-Ministerial Board of Certification and a DIPP (Department of Industrial Policy and Promotion) number has been issued to you, you can get listed as a seller on the Government of India’s e-procurement portal – Government e-Marketplace – and have the inside track on all Government of India Ministries/Departments/Public Sector undertakings subject to your ability to meet quality and technical requirements. Certified startups will also be entitled to exemptions on the earnest money deposit in your bid as well as in terms of the requirements regarding prior turnover and experience.
Faster Exit Benefits
The government has initiated provisions making winding down operations easier by appointing an insolvency professional to fast-track the closure of operations and facilitate the sale of goods as well as paying creditors, all while recognizing limited liability. Startups with a simple debt structure or those meeting the criteria outlined under this scheme will be able to achieve a complete exit within 90 days.
Checklist under the Startup India Scheme
An organisation will be eligible under the scheme if
- It is incorporated as a private limited company or registered as a partnership firm or a limited liability partnership in India
- It has been less than ten years from the date of its incorporation/registration
- Its turnover for any of the financial years since incorporation/registration has not exceeded INR 100 Crores
- It should possess a DIPP number
- It is funded by an incubation fund, angel fund, or private equity fund that is registered with the Securities and Exchange Board of India (SEBI)
- It has obtained a patron guarantee from the Indian Patent and Trademark Office
- It has a recommendation letter from an incubator
- Capital gain is exempt from income tax
- It is working towards the innovation, development, or improvement of products or processes or services, or if it is a scalable business model with a high potential for employment generation or wealth creation
Procedure to get DPIIT Certificate
The entity should follow the below-mentioned simple steps to get the DPIIT certificate of recognition.
Incorporation of the Business
As stated above, the entity must first incorporate the business as a Private Limited Company or a Partnership firm or a Limited Liability Partnership (LLP).
Get in touch with Actolegal.in to register your company.
Registering Business with the Startup India Scheme
The business needs to be registered with the Startup India Scheme to get the DPIIT certificate of recognition.
Apply for Start-up Recognition
The applicant unit need to access the Start-up India Recognition portal for Register with Start-up India to get the DPIIT Certificate of Recognition for Startups.
Provide the following details in the Start-up Recognition application :
- Entity Details: Nature of Entity, Industry, Sector, Categories and Company Incorporation Number and Registration Date
- Full Address of the Entity
- Details of the Authorized Representative
- Directors or Partner Details
- Details of Intellectual Property Right
- Details of funding
- Recognition received by the entity
Get the Startup Recognition Number
The DPIIT Certificate of Recognition for Startups will be issued after examination of the application and documents submitted.
Once the ministry approves the application and provides the unique startup recognition number, the startup can be registered with tax benefits.
Benefits for DPIIT Recognized Startups
The startups can avail the following benefits after obtaining the DPIIT Certificate of Recognition for Startups:
Self Certification
After obtaining the DPIIT Certificate of Recognition for Startups, the entity will be allowed to self-certify compliance under 3 Environmental Laws and 6 Labour Laws.
Start-Up Patent Application
The DPIIT recognized startups are required to pay only 80% of the fees on Patents, trademark, copyrights and design, and the fast-tracking of a patent application will be available for startups.
Easier Public Procurement Norms
- The DPIIT recognized startups will get an opportunity to list the product on Government e-Marketplace.
- DPIIT recognized startups are exempted from submitting Earnest Money Deposit
- Exemption from Prior Experience/Turnover is provided for Start-ups in all Central Government ministries and departments.
Easy winding up of Company
According to the Insolvency and Bankruptcy Code, 2016, the company can be wound up within 90 days of applying for insolvency
Funds of Funds
The startups will be eligible for Rs.10000 crore funds of funds from the Alternative Investment Funds.
Credit Guarantee fund
The startups can avail Rs.2000 crore Credit Guarantee fund through the National Credit Guarantee Trust Company or SIDBI over 4 years
Tax Exemptions
- After obtaining the Certificate of Recognition, the startup can apply for Tax exemption under section 80 IAC of the Income Tax Act.
- The DPIIT recognized startups can apply for Angel Tax Exemption.
- After obtaining the clearance for Tax exemption, the DPIIT recognized startups are exempted from income tax for 3 consecutive fiscal years out of its first ten years since formation.
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