Startup India is a flagship initiative of the Government of India, intended to build a strong ecosystem that is conducive for the growth of startup businesses, to drive sustainable economic growth and generate large scale employment opportunities. The Government through this initiative aims to empower startups to grow through innovation and design.

Several programs have been undertaken since the launch of the initiative on 16th of January, 2016 by Hon’ble Prime Minister, to contribute to his vision of transforming India into a country of job creators instead of job seekers. These programs have catalyzed the startup culture, with startups getting recognized through the Startup India initiative and many entrepreneurs availing the benefits of starting their own business in India.

An entity shall be considered as a Startup:

1. If it is incorporated as a private limited company or registered as a partnership firm or a limited liability partnership in India

2. Up to seven years from the date of its incorporation/registration; however, in the case of startups in the biotechnology sector, the period shall be up to ten years from the date of its incorporation/registration

3. If its turnover for any of the financial years since incorporation/registration has not exceeded INR 25 Crores

4. If it is working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation

Note: An entity formed by splitting up or reconstruction of a business already in existence shall not be considered a ‘Startup’.

Eligibility for Startup Registration     

• The company to be formed must be a private limited company or a limited liability partnership.
• The firm must provide innovative schemes or products.
• It should be a new firm or not older than five years, and the total turnover of the company should be not exceeding 25 crores.
• The firms should have obtained the approval from the Department of Industrial Policy and Promotion (DIPP).
• To get approval from DIPP, the firm should be funded by an Incubation fund, Angel Fund or Private Equity Fund.
• The firm should have obtained a patron guarantee from the Indian patent and Trademark Office.
• It must have a recommendation letter by an incubation.
• Capital gain is exempted from income tax under the startup India campaign.
• Angel fund, Incubation fund, Accelerators, Private Equity Fund, Angel network must be registered with SEBI (Securities and Exchange Board of India).

The benefit under Startups India Scheme

For availing various benefits under the Startup India scheme, an entity would be required to be recognized by DIPP as a startup by applying at https://www.startupindia.gov.in/content/sih/en/startupgov/startup-recognition-page.html

The benefits provided to recognized startups under the Startup India initiative are:

1. Self-Certification: Self-certify and comply under 3 Environmental & 6 Labour Laws

2. Tax Exemption: Income Tax exemption for a period of 3 consecutive years and exemption on capital and investments above Fair Market Value

3. Easy Winding of Company: In 90 days under Insolvency & Bankruptcy Code, 2016

4. Startup Patent Application & IPR Protection: Fast track patent application with up to 80% rebate in filing patents

5. Easier Public Procurement Norms: Exemption from requirement of earnest money deposit, prior turnover and experience requirements in government tenders

6. SIDBI Fund of Funds: Funds for investment into startups through Alternate Investment Funds

Documents required for registration under Startup India

1. Registration certificate either under:-

A Partnership Firm – To Know more Click on https://www.mycorporation.in/

B Limited Liability Partnership Firm – To know more click on https://www.mycorporation.in/india/llp-register-limited-liability-partnership

C Private Limited Company  – To know more click on https://www.mycorporation.in/india/private-limited-company-register-start-pvt-ltd

2. Pan Card
3. Address Proof of Business
4. Details of Director and Partners – PAN, Aadhaar and address proof
5. The Startups may self-certify compliance in respect of following 6 Labour Laws:

Other Constructions Workers’ (Regulation of Employment & Conditions of Service) Act, 1996

• The Payment of Gratuity Act, 1972
• The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
• The Inter-State Migrant Workmen (Regulation of Employment & Conditions of Service) Act, 1979
• The Contract Labour (Regulation and Abolition) Act, 1970
• The Employees’ State Insurance Act, 1948

Startup Recognition and Tax Exemptions

Startup Recognition:

Under the Startup India Action Plan, startups that meet the definition as prescribed under the G.S.R. notification 501 (E) are eligible to apply for recognition under the program. The Startups have to provide support documents, at the time of application.

Eligibility Criteria for Startup Recognition:

1. The Startup should be incorporated as a private limited company or registered as a partnership firm or a limited liability partnership
2. Turnover should be less than INR 100 Crores in any of the previous financial years
3. An entity shall be considered as a startup up to 10 years from the date of its incorporation
4. The Startup should be working towards innovation/ improvement of existing products, services and processes and should have the potential to generate employment/ create wealth. An entity formed by splitting up or reconstruction of an existing business shall not be considered a “Startup”

Startup India: 80 IAC Tax exemption:

Post getting recognition a Startup may apply for Tax exemption under section 80 IAC of the Income Tax Act. Post getting clearance for Tax exemption, the Startup can avail tax holiday for 3 consecutive financial years out of its first ten years since incorporation.

Eligibility Criteria for applying to Income Tax exemption (80IAC):

1. The entity should be a recognized Startup
2. Only Private limited or a Limited Liability Partnership is eligible for Tax exemption under Section 80IAC
3. The Startup should have been incorporated after 1st April, 2016

Startup India: Tax Exemption under Section 56 of the Income Tax Act (Angel Tax)

Post getting recognition a Startup may apply for Angel Tax Exemption.

Eligibility Criteria for Tax Exemption under Section 56 of the Income Tax Act:

1. The entity should be a DPIIT recognized Startup
2. Aggregate amount of paid up share capital and share premium of the Startup after the proposed issue of share, if any, does not exceed INR 25 Crore.

Procedure of registration under Startups

Registering a profile on the Startup India website is a fairly simple process.

Here is the link for registration https://www.startupindia.gov.in

1. Simply click on ‘Register’ and fill in the details as required in the registration form. An OTP will be sent to your registered email address, post submitting which your profile will get created.

2. You will have an option to select your profile type. For ‘Individuals’, the profile goes live immediately, whereas for ‘Startups’, the profile goes under moderation for 24-48 Hrs, post which you will be able to avail all benefits on www.startupindia.gov.in.

FAQs

What is Startup India?

Startup India is a flagship initiative of the Government of India, intended to build a strong ecosystem that is conducive for the growth of startup businesses, to drive sustainable economic growth and generate large scale employment opportunities. The Government through this initiative aims to empower startups to grow through innovation and design.

Several programs have been undertaken since the launch of the initiative on 16th of January, 2016 by Hon’ble Prime Minister, to contribute to his vision of transforming India into a country of job creators instead of job seekers. These programs have catalyzed the startup culture, with startups getting recognized through the Startup India initiative and many entrepreneurs availing the benefits of starting their own business in India.

Can a Foreign company register under Startups?

Any entity having atleast one registered office in India is welcome to register on ww.startupindia.gov.in.

What Qualifies as a Startup under Startup India Scheme?

An entity shall be considered as a Startup:

1. If it is incorporated as a private limited company or registered as a partnership firm or a limited liability partnership in India

2. Up to seven years from the date of its incorporation/registration; however, in the case of startups in the biotechnology sector, the period shall be up to ten years from the date of its incorporation/registration

3. If its turnover for any of the financial years since incorporation/registration has not exceeded INR 25 Crores

4. If it is working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation

Note: An entity formed by splitting up or reconstruction of a business already in existence shall not be considered a ‘Startup’.