The ‘Startup India Initiative’ was launched by the Department for Promotion of Industry and Internal Trade [DIPP], Ministry of Commerce and Industry in the year 2015, to foster the entrepreneurship spirit among the Indians and simplify the process of formation of businesses, allocating funding support and to further provide a host of benefits. 

ELIGIBLE STARTUP 

The organisations satisfying the below mentioned conditions are eligible to sign up as a Startup under the guidelines. 

The Startup India platform shall only register an “Eligible Startup”.

Any entity shall be considered as an “Eligible Startup”;

1. The following form of organisations are eligible to sign up as a startup:

Private Limited Company Limited Liability Partnership [LLP] Partnership Firm
Section 2 (68) of the Companies Act, 2013, defines a’ ‘Private Limited Company’ as:

“Private Company” means a company which by its articles,

(i) restricts the right to transfer its shares;

(ii) except in case of One Person Company, limits the number of its members to two hundred.

Section 2 (1)(n) of the Limited Liability Partnership Act, 2008, defines a, ‘Limited Liability Partnership’ as:

A partnership formed and registered under this Act.

A ‘Partnership Firm’, registered under the Partnership Act, 1932.

Persons who have entered into partnership with one another are called collectively “a Partnership Firm”.

2. It should not be older than 10 years from the date of its incorporation.

3. The Annual Turnover for any of the financial years since incorporation should not exceed INR 100 crores.

4. It should be working towards innovation, improvement or development of any product or its processes/services, or if it is a scalable business model with high potential of job and wealth creation.

Note: The entity should not have been formed as a result of splitting up or reconstruction of an existing business.

DOCUMENTS NEEDED FOR STARTUP REGISTRATION [DPIIT RECOGNITION]

Following documents are mandatory to sign up as a recognized startup:

  • Incorporation/Registration certificate of the entity.
  • Director details in case of Pvt. Ltd. Companies, Partner details in case of Partnership firms and Designated partner details in case of LLPs.
  • PAN Number
  • A Proof of Concept [PoC] [website link/video/pitchdeck] for Startups in Validation stage. For Early Traction and Scaling stage, it is necessary to provide a video or pitch deck in addition to a company website. Ideation stage Startups are not mandated to submit a proof of concept.
  • Patent and trademark details are optional.

Following documents are not required:

  • GST certificate
  • MSME certificate
  • Udyog Aadhar
  • Sanction letters from any sectoral authorities
  • Letter of Recommendations

STEPS FOR REGISTRATION 

Step 1: Visit http://www.startupindia.gov.in

Step 2: If you’re a new user then register yourself on the portal providing very basic details such as type of user, name and stage of the startup, etc. If you’re an existing user then just login with your credentials.

Step 3: New users can go to get recognized tab directly and existing users have to visit dashboard and click on DPIIT recognition.

Step 4: On the ‘Recognition Application Detail’ page, click on ‘View Details’ under the Registration details section.

Step 5: Then fill up the ‘Startup Recognition Form’ and click on submit.

Note:

  • If you’re at the Idea Stage then you can simply apply without any Proof of Concept [PoC] and get recognised. You can update it later, when you reach validation/early traction/scaling stage.
  • You can also update us by disclosing your funding details once you got any funding from any investor.
  • You can strengthen your application by providing your IPR details [if any]. 

TIME TAKEN TO PROCESS THE APPLICATION 

The authority will process the application within 48-72 working hours [typically it takes around 3-5 working days]. 

PROOF OF CONCEPT [PoC]

A PoC is a concrete proof of whether the idea will actually work or not and how it will be executed with the target audience. PoC is a demonstration of the idea or method to prove its feasibility. It is a way of testing whether a particular business idea can be turned into a profitable venture or not. Depending on the type of business, a PoC can take any form, be it a video representing the idea, described in a document, or an early prototype of the product.

Some tips to frame a PoC:

  • Conduct a thorough research and development around the history of any similar work done or being done around the world. If you find no similar work or any existing guides, articles or information, then your idea is very original.
  • Justify the need of your idea, how people will benefit from the same. Specify the problem of which your idea will give a solution and why it is needed.
  • Describe the implementation of your idea [practicality and profitability].

MAJOR BENEFITS OF BEING A RECOGNIZED STARTUP

The DPIIT recognized Startups will be eligible for the following benefits:

i. Funding support via Startup India Seed Fund Scheme

  • The Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry is initiating Startup India Seed Fund Scheme (SISFS) with an outlay of INR 945 Crore. The enterprise has to separately apply for the seed fund scheme [seedfund.startupindia.gov.in].

ii. Relaxation in public procurement norms

  • The Central Govt. has authorized its ministries, depts. and PSUs to relax norms in all public procurements. Startups are entitled to claim exemptions on the basis on prior turnover, experience and on deposit of the earnest money.

iii. Self-Certification under the Labour & Environment Laws

  • To reduce the compliance burden, the Startups are allowed to self-certify their compliances under 9 labour laws and 3 Environment Laws for a period of 3 to 5 years since incorporation.

Startup India Guide 2022 Registration, Recognition & Benefits

iv. Fund of fund for Startups 

  • To provide equity support to the innovation driven enterprises, the Govt. has se aside a corpus of INR 10,000 crores, to be managed by SIDBI. The fund is in the nature of fund of funds and flow of funds would be as- Government to SIDBI, then SIDBI will invest in SEBI regd. Venture Capitals, then these Venture Capitals will invest in the Startups.

v. Intellectual Property Rights

  • Fast tracking of stratup patent applications
  • Rebate on filing of application
  • A dedicated panel of facilitators to assist in IP applications

vi. Programs on Startup India Website 

  • The startup india portal offers various learning and development programs.
  • To make starting up easy, the portal bring you the best of some relevant services out there in the market, free of cost. 

vii. Faster exit routes for Startups on Fast Track Basis

  • The MCA has notified Startups as ‘Fast Track Firms’ enabling them to wind up their operations within a period of 90 days.

viii. Income tax exemption for a period of 3 consecutive years out of 10 years since incorporation. [Section-80IAC of the Income Tax Act]

  • Available for only those Startups incorporated on or after 1st April, 2016 but before 1st April, 2023.
  • To claim this exemption the recognized startups has to obtain a certificate from the Inter-Ministerial Board [the board is set up by the DPIIT, DBT and DST].
  • The applicant has to apply for this exemption by logging into the Startup India portal.

ix. Exemption from taxability of share premium [Section 56(2)(viib) of the Income Tax Act]

  • To avail this exemption the startup has to file a duly signed declaration in FORM 2 to DPIIT. [see notification no G.S.R 127(E)]
  • The applicant has to apply for this exemption by logging into the Startup India portal.

x. Capital Gain on transfer of residential property [Section 54GB of the Income Tax Act] 

  • To claim this exemption the recognized startups has to obtain a certificate from the Inter-Ministerial Board [the board is set up by the DPIIT, DBT and DST]. 

xi. Carry forward and set off of losses [Section 79 of the Income Tax Act] 

  • To claim this exemption the recognized startups has to obtain a certificate from the Inter-Ministerial Board [the board is set up by the DPIIT, DBT and DST]. 

xii. Deferment of tax liability on ESOPs [Sections 156, 191 and 192 of the Income Tax Act]

  • To claim this exemption the recognized startups has to obtain a certificate from the Inter-Ministerial Board [the board is set up by the DPIIT, DBT and DST].

Author Bio

Qualification: LL.B / Advocate
Company: Faculty of Law, University of Delhi
Location: Delhi, Delhi, India
Member Since: 07 Jul 2020 | Total Posts: 1
I'm a third-year law student at the Faculty of Law, University of Delhi. I have a keen interest in corporate and other allied laws. For any further queries or doubts, You can directly reach me at [email protected] View Full Profile

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