Introduction: The term “start-up” has taken the world by storm, and India is no exception. Thanks to initiatives like Start-up India by the Department for Promotion of Industry and Internal Trade (DPIIT), the Indian start-up ecosystem is booming. DPIIT Start-up registration is a crucial stepping stone for entrepreneurs, as it eases regulatory burdens and offers multiple benefits. This comprehensive guide aims to elucidate the various facets of start-up registration in India, from eligibility criteria to benefits and the registration process itself.
Start-up Registration: Start-up is a word that is extremely popular nowadays. A start-up is a business that basically offers solutions to existing problems of the society in the form of new & reformed products/services.
Thousands of people have started their own start-ups showing a boom in the Indian economy.
The online show, SHARK TANK is based on such start-ups & their investment and has played a major role in drawing attention to various start-ups.
Objective: The Department for Promotion of Industry and Internal Trade (DPIIT) through Start-up India initiative has executed various projects & undertaken recurring models to propel the Indian Start-up Ecosystem. This initiative aims to build a strong ecosystem for nurturing innovation and promoting Start-ups in the country that will drive sustainable economic growth and generate large-scale employment opportunities. The DPIIT Start-up registration mainly aims to reduce the regulatory burden on Start-ups, allowing them to focus on their core business and keep compliance costs low.
Eligibility Criteria: To register under this initiative, there are stringent eligibility criteria in place:
1. Company Age: The period of existence and operations should not exceed 10 years from the Date of Incorporation.
2. Company Type: Shall be incorporated as a
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- Private Limited Company (as defined in the Companies Act 2013) or
- Registered Partnership Firm (registered under section 59 of the Partnership Act 1932) or
- Limited Liability Partnership (as defined in the LLP Act 2008)
3. Annual Turnover: Should have an annual turnover not exceeding Rs.100 crore for any of the financial years since its Incorporation
4. Original Entity: Entity should not have been formed by splitting up or reconstructing an already existing business
5. Innovative & Scalable: Should work towards the development or improvement of a product, process or service and/or have a scalable business model with high potential for the creation of wealth & employment.
Benefits: Start-ups that successfully register enjoy a myriad of benefits, such as:
1. Self-certify – Start-ups are allowed to self-certify compliance with 6 Labour Laws and 3 Environmental Laws through a simple online procedure.
2. Easy & quick IPR application- Patent applications filed by start-ups are fast-tracked for examination so that their value can be realised sooner.
3. Rebate of patent application – Also, Start-ups are provided with an 80% rebate in filing patents vis-a-vis other companies. This will help them spare costs in the crucial formative years.
4. Tax exemption under various sections- Eligible start-ups are exempted from paying income tax for 3 consecutive financial years out of their first ten years since incorporation.
5. Exemption under section 56 of Income Tax Act 1961- Consideration of shares received by eligible start-ups shall be exempt up to an aggregate limit of INR 25 Crore.
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- Investments into eligible start-ups by listed companies with a net worth of more than INR 100 Crore or turnover of more than INR 250 Crore shall be exempt under Section 56 (2) VIIB of the Income Tax Act, 1961.
- Investments into eligible Start-ups by Accredited Investors, Non-Residents, AIFs (Category I), & listed companies with a net worth of more than 100 crores or turnover of more than INR 250 Crore, shall be exempt under Section 56(2)(VIIB) of Income Tax Act, 1961.
6. Easy winding up of the company- As per the Insolvency and Bankruptcy Code, 2016, start-ups with simple debt structures or those meeting certain income specified criteria can be wound up within 90 days of filing an application for insolvency.
7. Easy public procurement norms- DPIIT recognised start-ups have been exempted from submitting Earnest Money Deposits (EMD) or bid security while filling government tenders. Also, DPIIT Recognized Start-ups can register on GeM as sellers and sell their products/ services directly to Government entities. This is a great opportunity for start-ups to work on trial orders with the Government.
Note: Post getting recognition a Start-up may apply for Tax exemption under section 80 IAC of the Income Tax Act. Post getting clearance for Tax exemption, the Start-up can avail of tax holiday for 3 consecutive financial years out of its first ten years since incorporation.
You may also read the eligibility criteria for applying for Income Tax exemption under section 80IAC and section 56 of the Income Tax Act 1961 by clicking the links provided below.
PROCESS
1. Incorporate your business entity- The first step is to incorporate any one of the abovementioned three entities.
2. Register with DPIIT Start-up India- Go to https://www.startupindia.gov.in/ and create your Start-up India profile using your name, mobile no., email ID, etc.
3. Register with NSWS- After your profile has been created, log in to your profile and click on “Apply for DPIIT Recognition”. On the next page, click on ‘Apply as Company or LLP’ or ‘Apply as Partnership Firm’. When clicking on the ‘Apply for Company or LLP’ button, it will redirect you to the National Single Window System (NSWS) website. Companies and LLPs should register on the NSWS website and add the form ‘Registration as a Start-up’ to get DPIIT recognition.
4. Fill in the application form- On the ‘Start-up Recognition Form’, you need to fill in the details such as the entity details, office address, authorised representative details, directors/partner details, information required, start-up activities and self-certification and submit the form.
5. Recognition number- On submitting the form, you will get a recognition number immediately and afterwards, upon verification of all your documents, a registration certificate will be issued.
DOCUMENTS REQUIRED
1. A copy of incorporation/registration Certificate of your start-up
2. Authorisation letter of the authorised representative of the company, LLP or partnership firm
3. PAN of the authorised representative
4. Proof of funding, if any
5. A write-up about the nature of the business highlighting how it is working towards innovation, development or improvement of products or processes or services, or its scalability in terms of employment generation or wealth creation like pitch deck/website link/video (in case of a validation/ early traction/scaling stage start-up)
6. Patent and trademark details, if any
7. List of awards or certificates of recognition, if any.
Conclusion: Registering a start-up in India is not only a legal necessity but also a strategic move to avail numerous benefits that can help your business scale quickly and efficiently. DPIIT’s Start-up India initiative makes this process easier, more transparent, and beneficial for Indian entrepreneurs. Armed with this information, you can confidently take the first step in your entrepreneurial journey.
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DISCLAIMER:- This Blog is for the purposes of information / knowledge and shall not be treated as solicitation in any manner or for any other purposes whatsoever.
Feel free to contact the author for further clarification at 9953808432 or via mail at cssinghaniaandassociates@gmail.com. The author is the founder of SINGHANIA & ASSOCIATES (Practicing Company Secretaries Firm) based in Delhi.
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