Start Up India Scheme & Benefits to Startups

Introduction

Many perks are being provided to entrepreneurs launching startups in order to stimulate growth and support the Indian economy. The Startup India project provides numerous incentives to startups that are accredited for creating their own businesses in India.

Vision of Scheme

The ultimate goal of the Startup India scheme is to instill a sense of inventiveness in aspiring entrepreneurs. The Startup India programme was created to spur job creation and economic growth in the country. The government is attempting to embrace new ideas, research, and innovation through this effort.

Eligibility for Companies

According to the Startup India Action Plan, the following conditions must be met in order to be considered a startup:

• Being formed or registered in India for a period of up to ten years from the date of incorporation.
• It should be a private limited corporation, a partnership firm, or a limited liability partnership.
• For any fiscal year since incorporation/registration, the yearly turnover has not exceeded Rs. 100 crore.
• It works towards innovation, creating, or upgrading products, processes, or services, or is it a scalable business model with a high potential for job creation or wealth creation.

It is important to highlight that an entity formed through the division or reconstruction of an existing business is not regarded as a ‘Startup’. Furthermore, a company will not be referred to as a startup if:

• Completion of ten years from the date of incorporation/registration, or
• Achievement of a turnover of more than Rs. 100 crore in any prior year.

Benefits for Startup India

Starting a business is difficult enough, so take advantage of any assistance that comes your way. That is the goal of the Startup India initiative: to assist entrepreneurs.

There are numerous benefits to registering your firm with StartUp India. Major of them are listed below –

• Relaxed norms

All startups that are recognised by the Department for Promotion of Industry and Internal Trade  (DPIIT) are eligible to be listed as sellers on the Government e-Marketplace, the Government of India’s main e-procurement portal. The Indian government has authorized its ministries, departments, and public sector undertakings to ease standards in all public procurements for startups accredited by the DPIIT.

Your company can apply for government bids as a DPIIT- authorized startup without needing to present past proof of activity or have a minimum yearly turnover.

• Exemption from paying taxes

Your startup is qualified for a tax exemption under Section 80-IAC of the Income Tax Act if it is registered with Startup India and DPIIT. Once the income tax authorities give you the go-ahead, your startup can enjoy a three-year tax break. In addition to the foregoing, recognised startups can petition for angel tax exemption under Section 56 of the Income Tax Act.

• Access to funding

Startup India offers two types of grants available to startups who register with DPIIT. As a Startup India participant, your company can access funds from the Fund of Fund For Startups (FFS), which has a capital of Rs 10,000 crore. FFS, which is administered by SIDBI, is distributed to SEBI-registered venture capital firms, who then invest in startups. Another fund of money under Startup India is for companies seeking seed funding. 

• Easy exit

It is a well-known reality that the majority of startups fail to take off and must be shut down. Surprisingly, it is more difficult to close a business than it is to create one.  However, if your startup is acknowledged by DPIIT and you need to exit, the process is pretty straightforward. A startup can close their doors within 90 days of filing their application.

• Cheaper patent costs

Filing fees for patents and trademarks can be rather high. In addition to the cost, the patent and trademark certificates take a very long time to obtain. The good news is those startups recognised by DPIIT can process their patents and other intellectual property rights services at significantly lower fees.  Startup India will provide your company an 80% discount on patent filing fees. If you apply for trademark certification, you will receive a 50% discount, reducing the fee from Rs 10,000 to Rs 5,000. Your application will be expedited and processed within 72 hours.

• Capital Gains Tax Exemptions

Startups are also allowed to not pay capital gains tax on earnings made from the sale of their stock. This encourages startups to list their stock on stock markets and raise public money. 

• Mentorship and Incubation

Through a number of programmes, the government has supported startup incubation and mentorship programmes. This makes it easier for startups to acquire resources and advice from seasoned businesspeople.