Article explains Meaning of Start Up, Key Points To Understand a Start up, Eligibility Criteria for Startup Recognition, Some Benefits of start up and Registration and fees of Start-up.
A startup or start-up is a company or project initiated by an entrepreneur to seek, effectively develop, and validate a scalable business model. While entrepreneurship refers to all new businesses, including self-employment and businesses that never intend to become registered, startups refer to the new businesses that intend to grow large beyond the solo founder.
A. Under Income Tax
1.80 IAC Tax Exemption
Post getting recognition a Startup may apply for Tax exemption under section 80 IAC of the Income Tax Act. Post getting clearance for Tax exemption, the Startup can avail tax holiday for 3 consecutive financial years out of its first ten years since incorporation.
Eligibility Criteria for applying to Income Tax exemption (80IAC):
2. Tax Exemption under Section 56 of the Income Tax Act (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:
B. Reduction in cost
The government also provides lists of facilitators of patents and trademarks. They will provide high quality Intellectual Property Right Services including fast examination of patents at lower fees. The government will bear all facilitator fees and the startup will bear only the statutory fees. They will enjoy 80% reduction in cost of filing patfunds
C. Easy access to funds
A 10,000 crore rupees fund is set-up by government to provide funds to the startups as venture capital. The government is also giving guarantee to the lenders to encourage banks and other financial institutions for providing venture capital.
D. Some other benefits of Start Up
E. Easy exit
In case of exit – A startup can close its business within 90 days from the date of application of winding up.
Step 1: Incorporate your business You must first incorporate your business as a Private Limited Company or a Partnership firm or a Limited Liability Partnership You have to follow all the normal procedures for registration of any business like obtaining the certificate of Incorporation/Partnership registration, PAN, and other required compliances.
Step 2: Register with Startup India
Then the business must be registered as a startup. The entire process is simple and online. All you need to do is log on to the Startup India website and fill up the form with details of your business and upload certain documents.
Step 3:- Documents Required
You need to upload the certificate of incorporation of your company/LLP (Registration Certificate in case of partnership)
A brief description of the innovative nature of your products/services.
Step 4: Answer whether you would like to avail tax benefits
Startups are exempted from income tax for 3 years. But to avail these benefits, they must be certified by the Inter-Ministerial Board (IMB). Start-ups recognized by DIPP, Govt. of India can nowlti directly avail IPR related benefits without requiring any additional certification from IMB.
Step 5: Finally, you must self-certify that you satisfy the following conditions
a) You must register your new company as a Private Limited Company, Partnership firm or a Limited Liability Partnership
b) Your business must be incorporated/registered in India, not before 5 years.
c) Turnover must be less than 25 crores per year.
d) Innovation is a must– the business must be working towards innovating something new or significantly improving the existing used technology.
e) Your business must not be as a result of splitting up or reconstruction of an 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.
Note:- No legal fees is charged by the department