Startup India Scheme is the Central government’s initiative, whose primary objectives are the promotion of startups, generation of employment, and the creation of wealth. Under Startup India Registration, new-entrants are granted a tax-holiday for three years and the Government through this initiative aims to empower startups to grow through innovation and design.
Startup means an entity whose period existence and operation should not be exceeding 10 years from the date of Incorporation. Annual turnover should not exceed Rupees 100 Crores in any preceding financial year. Startup should towards development or improvement of a product, process or services.
Recognition of a startup shall be up to 10 years from the date of incorporation or if its turnover for any previous year exceeds Rupees 100 crores.
Registration of a startup with DIPP
startups are concentrated on earning revenues and maximizing their profits by using various methods. In the initial years, most of the startups are bootstrapping their organizations out of their hard-earned money. One of the ways to enhance your earnings is to reduce the cost. Government collect 25% of our income in form of Income tax which leads to increased cost. We can save this cost for three years by simply registering our startup with the Startup India initiative.
Startup India Registration Benefits:
The benefits for startup India Registration comprise of:
Startups are allowed to self-certify to comply with 3 environmental laws and 6 Labour Laws. No inspection will be conducted for period of three years, in the case of labour laws.
Easy winding up of Company
You can easily windup of Companies in just 90 days under Insolvency & Bankruptcy Code, 2016.
Startup’s Patent Application & IPR Protection
After recognition under Startup India, you can fast track your patent application with up to 80% rebate in filling patents. The startup will bear only the statutory fees and the government will bear all facilitator fees.
Public Procurement Made Easy
Get Exempt from:
Tax Exemption 80 IAC:
Post getting recognition a Startup may apply for Tax exemption under section 80 IAC of the Income Tax Act. After getting approval for Tax exemption, the Startup can avail tax holiday for 3 consecutive financial years out of its first ten years since incorporation.
Tax exemption under section 56 of Income Tax (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:
a. The entity should be a DPIIT recognized Startup
b. 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 for Startup India Registration:
Here are the steps for Startup India Registration under Startup India Scheme:
Step 1: Incorporation of your startup business
The first step is to register your business or get it incorporated as an entity. It can be a Private Limited Company or a Partnership firm or a Limited Liability Partnership depending upon certain criteria like the staff, scale, operations, partners willingness and other aspects.
The procedures for incorporation is normal for registering any business. Before registering your business with Startup India, you must obtain the certificate of Incorporation/Partnership registration, PAN, and other required compliance.
Step 2: Get your business register with Startup India
The next step is to get your business or a company registered as a startup. The entire process of Startup India registration is online and has been made simple. The startup owner is required to visit the official website of Startup India i.e startupindia.gov.in and fill up the form in the prescribed format with all the necessary details of your business along with uploading of certain important documents required for startup india registration.
Step 3: Necessary documents to be uploaded
A letter of recommendation needs to be submitted with the registration form on the website and it could be from any of the following:
- A recommendation letter (describing nature/innovation of business) from an Incubator established in a post-graduate college in India, in a prescribed format specified by the Department of Industrial Policy and Promotion (DIPP); OR
- A letter of support by an incubator, which is funded (in relation to the project/business) by Government of India as part of any specified scheme to promote innovation and that particular nature of business; OR
- A recommendation letter (describing nature/innovation of business), from an Incubator, recognised by the India Government in specified format by DIPP; OR
- A letter of funding of minimum 20% in equity, by any Incubation Fund or Angel Fund or Private Equity Fund/ or Accelerator/ or Angel Network, who is registered under SEBI; OR
- A letter of funding issued by the Government of India or any State Government as part of any specified scheme that supports or promotes innovation; OR
- A patent filed and published in the Journal by the Indian Patent Office in specific areas that are connected with the nature of the business being promoted.
The other document which needs to be uploaded is the certificate of incorporation of your company/LLP or the Registration Certificate in case of partnership firm.
A detailed description of the business, describing the innovative nature of your products/services also needs to be uploaded.
Step 4: Now answer, if you want to avail tax benefits or not
The government is exempting the startups from income tax for the first 3 years. But in order to avail these benefits, they must be certified by the Inter-Ministerial Board (IMB). While the start-ups recognised by DIPP or Govt. of India can directly avail IPR related benefits.
Step 5: Now certify further necessary things
- The startup must be registered as a Private Limited Company, Partnership firm or a Limited Liability Partnership
- The business must be incorporated/registered in India, not before 5 years, meaning it should be not older than 5 years.
- The turnover of the business must be less than Rs 25 crores per year.
- Innovation is a must for the business– It should be working towards innovating something new or towards improving the existing technology.
- The new business must not be formed after splitting up or reconstruction of any existing business.
Step 6: Immediately get recognition number
That’s it! On applying you will immediately get a recognition number for your startup. The certificate of recognition will be issued after the examination of all your documents.
However, in case the required document uploaded/wrong document uploaded or a forged document has been uploaded then you shall be liable to a fine of 50% of your paid-up capital of the startup with a minimum fine of Rs. 25,000.