A program of the Indian government, startup India, seeks to create a robust ecosystem that fosters the expansion of entrepreneurs throughout the nation. It strives to continue economic growth and provide a significant number of job opportunities. In a nutshell, the Startup India Scheme is all about starting small or new businesses. It is typically used for a small business founded by one or more people. A startup offers a novel product or service that any other organisation does not provide in a comparable manner, which sets it apart from other new firms.
Did you know?
You can fund your own business with the help of the Government of India. The start-up India Scheme facilitates simplified funding support and incentives for start-ups to boost economic growth, entrepreneurship, and employment across India.
What is the Startup India Scheme?
A start-up India scheme was launched by the Prime Minister on 16th January 2016. As part of its efforts to eradicate unemployment, it has developed several programs to support entrepreneurs, build a transformative business ecosystem, and create more jobs. Programs managed by the Startup India Team are organized by the Industrial Policy and Promotion Department.
What is a Startup?
According to the rules of the scheme set by the Government of India, any enterprise falling under the following category will be recognised as a startup and considered eligible by the DPIIT to enjoy the startup India benefits from the Indian Government.
- Type of Business Entity- It should have already been integrated as a Registered Partnership Firm, Private Limited Company, or Limited Liability Partnership.
- Age of the Business Enterprise- The date of inclusion of the company should not be more than ten years.
- Annual Turnover- The turnover should be limited to ₹100 crore in any financial year since incorporation.
- Scalable and Innovative- You must have a plan to develop or improve your service or product or a scalable business model that can create employment and generate wealth.
- Original Business Entity- The company must have been created from the base of the promoters and not because of reconstructing or splitting up of any existing company.
Eligibility Criteria for Startup Registration in Startup India Registration:
- The company should be a Limited Liability Partnership or a Private Limited Company.
- The firm should not be five years old with total turnovers within ₹25 Crores.
- The Department of Industrial Policy and Promotion should approve the firms.
- The firm needs to be funded by Angel Fund, Incubation Fund or Private Equity Fund.
- The firm should have a recommendation letter by an incubation.
- The firm must have received a proton guarantee,
- Capital gain is exempted from income tax.
- Incubation fund, Private equity fund, and angel networks must be registered with the Securities and Exchange Board of India.
What are the Benefits of Being Registered Under DPIIT?
The start-up India scheme benefits are extensive, and the companies registered under DPIIT receive special facilities such as:
Simplification and Support:
Receive easier agreement and exit process for unsuccessful entities, legal help, swift acceptance of patent applications and a well-informed website.
Funding and incentives:
The eligible startups are exempted from Income and Capital Gains Tax, a credit guarantee scheme and a sponsor of funds to suffuse more money into the business ventures.
Industry-Academia Partnerships and Incubation:
Getting facility to create numerous innovation labs and incubators, competitions, events and grants.
Benefits of Startup Registration
The benefits of this registration are
1. Self Certification:
The self-certification procedure reduces the regulatory burden on new business ventures. The benefits are as follows-
- Startups can self-certify compliance with three environmental and six Labour Laws through a simplified online application process.
- For labour laws, no inspection will be done for five years unless the inspecting officer receives any written, verifiable, credible complaint of rule violation.
- For environmental laws, white category startups recognised by Central Pollution Control Board can self-certify compliance by random checks.
Here are the specifications of the laws-
- The Employees’ State Insurance Act, 1948
- The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
- The Contract Labour (Regulation and Abolition) Act, 1970
- The Payment of Gratuity Act, 1972
- The Inter-State Migrant Workmen (Regulation of Employment & Conditions of Service) Act, 1979
- The Building and Other Constructions Workers’ (Regulation of Employment & Conditions of Service) Act, 1996
- "The Water (Prevention & Control of Pollution) Act", 1974
- "The Air (Prevention & Control of Pollution) Act", 1981
- "The Water (Prevention & Control of Pollution) Cess (Amendment) Act", 2003
Eligibility Criteria of Self-Certification:
The startups have to be recognised by DPIIT, and the date of their incorporation has to be within five years.
- The startup has to be registered in Shram Suvidha Portal of the Ministry of Labour and Employment.
- Register in that portal and log in.
- Click the link mentioning “Is Any of your Establishment a Startup?”
- The registration will be completed by following the steps mentioned.
2.Tax Exemption Under 80IAC:
Eligible startups are facilitated with an income tax exemption for three financial years of the first ten years since incorporation.
The company should be DPIIT recognised and be either Private Limited or a Limited Liability Partnership Company. It must have been registered after or on 1st April 2016.
- Register on the Startup India portal and apply for DPIIT recognition.
- Go to the section 80 IAC exemption application.
- Fill in the details and upload the required documents and submit the application.
The documents needed are-
- Board Resolution
- Memorandum of Association for LLP Deed/Pvt. Ltd.
- IT returns for the last three financial years.
- Annual Accounts of the startup for the last three financial years
- Go to the dashboard to check the status of the application.
3. 56 Exemption:
Exemption under Section 56(2)(VIIIB) of the Income Tax Act (H3)
- The listed companies investing in startups with a net worth exceeding ₹100 Crore and a turnover exceeding ₹250 Crore will be exempted under this section.
- Investments into Startups by Non-residents, Accredited Investors, listed companies and Category I AIFs with a turnover exceeding ₹250 Crore and a net worth exceeding ₹100 crores will be exempted.
- Received shares of startups will be exempted upto a limit of ₹25 Crores.
- Have to be a DPIIT recognised private limited company.
- Does not invest in certain asset classes.
- Should not invest in transport vehicles exceeding ₹10 Lakh, immovable property, capital contribution to other entities, loans and advances.
- Get DPIIT Recognition from Startup India Portal
- Fill out the Section 56 Exemption application form.
- After the activation of registration, the startup company will receive an email.
4. Easy Winding up of Failed Businesses:
As per the guidelines of the Insolvency and Bankruptcy Code of 2016, startups with simple debt structures can wind up within 90 days of submitting an application form for insolvency. An insolvency professional can take charge of the company, including asset liquidation and paying the creditors within six months of appointment. The insolvency assistant oversees the sale of acquisitions, business closure, and creditors' repayment.
5. IPR Application and Patent Application
This helps startups acquire a patent quite easily and quickly. It helps in-
- Fast-tracking patent applications
- Assistance in the filing of IP apps.
- The Government bears the facilitation cost.
- 80% rebate on the filing of patent applications.
These are the benefits that will provide your business with simplified procedure, legal support, needful funding and support from the industry.
Features of the Startup India Scheme:
The standout features of the scheme are-
- The newly registered start-ups are granted a tax holiday for three years.
- The Government provides a fund of ₹2500 Crore and a credit guarantee of ₹500 Crores.
- The process is simple for approval, clearance and registration for startups.
- No inspection regarding labour laws up to three years of launch.
Register Your Company:
The registration can be done through Partnership Firm, Limited Liability Partnership Firm and Private Limited Company. To apply-
- Log on to Startup India Portal at https://startupindia.gov.in/registration.php.
- Enter your Legal Entity, Incorporation/Registration No, PAN number, address, Pin Code, State, and details of the Authorized Representative, Directors and Partners.
- Upload documents and self-certification as required.
- File the Registration or Incorporation of the business entity.
Hopefully, you have a clear picture of the Startup India Scheme, startup India loan, start-up India scheme benefits and following the instructions, you can register for the same. Follow Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting.