Introduction:
The Government of India announced Startup India Action plan, in order to build a strong eco-system for nurturing innovation and to provide bank finance for the startup, that results in sustainable economic growth and generate large scale employment opportunities. This Action plan also aims to grow through innovation and design. In order to meet the objectives of the initiative, Central Government is announcing the action plan that addresses all the aspects of the startup ecosystem.
Definition of Startup as per Government notification:
To bring uniformity in identified startups, as per the notification G.S.R 180 (E) dated February 17, 2016 (F.No.5 (91)/2015-BE.I) an entity shall be considered as Startup:
> Up to five years from the date of incorporation.
> Entity should be incorporated on or after 1 April, 2016.
> If its turnover does not exceed 25 crores in last five financial years.
> It is working towards innovation, development, deployment and commercialization new products, processes or services driven by technology or intellectual property, significantly improved existing product or service or process that will create or add value for customers or workflow.
> Further provided that, it should not be formed by splitting or Reconstruction of a business already in existence.
Benefits of Startup:
> Easy Registration that a startup can easily register itself through a simplified online application procedure.
> Tax exemption on first 3 years profits, this policy helps startup for revolutionary growth in future
> A Startup India hub will be created, it will help entrepreneurs to share knowledge and access for financial aid.
> Reduction in red tape, i.e startup will adopt a self-certification to reduce the rules and regulation liabilities, administrative rules.
> Rebate of 80% on total value will be given to entrepreneurs on Patent application.
> For startup in primary level of investment they can avail benefit of tax relief from capital gain.
> Easy exit that, if a startup fails government will assist the entrepreneur to find an easy way out.
> A startup is able to get legal support in filing of official documents.
Eligibility criteria to be classified as a Startup:
The Following Entities are eligible for Start-ups:
> Private Limited Company registered under the Companies Act, 2013.
> Limited Liability Partnership registered under Limited Liability Partnership Act, 2008.
> Partnership Firm registered under the Indian Partnership Act, 1932.
When can a startup get disqualified?
> An Entity shall cease to be a startup:
- On completion of five years from the date of its incorporation.
- Its turnover exceeds 25 crores in any previous financial year.
Procedure of Registration:
Step-1: Entity need to register itself with MCA or Register of Firms using the Existing Processes
Step-2: Entity need to get the recommendation letter/copy of patent application from anyone of the following:
> Recommendation (with regard to innovation nature of business), in a format specified by Department of Industrial Policy and Promotion, from any incubator established in post-graduate college in India (Format provided)
> Letter of recommendation from Industry association recognized by DEPARTMENT OF INDUSTRIAL POLICY AND PROMOTION(Format provided)
Download Format of the Recommendation Letter on Letter Head of the Industry associate
> Recommendation (with regard to innovative nature of business), in a format specified by Department of Industrial Policy and Promotion, from any Incubator recognized by Government of India (Format provided).
> Letter of funding of not less than 20 percent in equity by any Incubation Fund/ Angel Fund/ Private Equity Fund/ Accelerator/ Angel Network duly registered with Securities and Exchange Board of India that endorses innovative nature of the business. Department of Industrial Policy and Promotion may include any such fund in a negative list for such reasons as it may deem fit (Format provided).
> Letter of support by any Incubator which is funded (in relation to the project) from Government of India or any State Government as part of any specified scheme to promote innovation (Format provided).
> Letter of funding by Government of India or any State Government as part of any specified scheme to promote innovation.
> Patent filed and published in the Journal by the India Patent Office in areas affiliated with the nature of business being promoted.
Step-3: Entity need to register in Startup India portal.
Upon login, need fill the following details:
1. Type of legal entity.
2. Entity Incorporation/registration number.
3. Entity incorporation/registration date.
4. Entity PAN Number (optional).
5. Entity address with postal code & state.
6. Entity authorized representative details.
7. Entity director(s)/partner(s) details.
8. Upload supporting documents and self-certification (as detailed in step 2)
9. Upload of Incorporation/registration certificate of company/LLP/Partnership.
10. Upload brief note on innovativeness of products /services offered by the entity.
11. Confirmation on availing tax benefits under start up India Initiative.
12. Self-Certification and submission of Form.
(Author can be reached at apoorvasahu@outlook.com or +91-9986159793)
Well explained