Startup India Scheme – Registration & Benefits

What is a Startup?

A startup is a young entity founded by one or more entrepreneurs to offer a unique product or service. The entity either develops a new product/service or offers the current product/service in a different manner.

What is Startup India?

Startup India is a flagship initiative of the Government of India, intended to build a strong ecosystem that is conducive for the growth of startup businesses, to drive sustainable economic growth and generate large scale employment opportunities. The Government through this initiative aims to empower startups to grow through innovation and design.

Benefits under Startup India Scheme

The first requirement is to incorporate the business in a legal form which can be a Private Limited Company, a Limited Liability Partnership or a Partnership Firm.

For availing various benefits under the Startup India scheme, an entity would be required to be recognized by Department for Promotion of Industry and Internal Trade (DPIIT) as a startup by applying at https://www.startupindia.gov.in/content/sih/en/startupgov/startup-recognition-page.html.

The benefits provided to recognize startups under the Startup India initiative are:

1. Self-Certification: Self-certify and comply under 3 Environmental & 6 Labour Laws. In case of labour laws, no inspection will be conducted for a period of 3 years.

a. Labour Laws

• Other Constructions Workers’ (Regulation of Employment & Conditions of Service) Act, 1996
• The Inter-State Migrant Workmen (Regulation of Employment & Conditions of Service) Act, 1979
• The Payment of Gratuity Act, 1972
• The Contract Labour (Regulation and Abolition) Act, 1970
• The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
• The Employees’ State Insurance Act, 1948

b. Environmental Laws

• The Water (Prevention & Control of Pollution) Act, 1974
• The Water (Prevention & Control of Pollution) Cess (Amendment) Act, 2003
• The Air (Prevention & Control of Pollution) Act, 1981

2. Tax Exemption: Income Tax exemption for a period of 3 consecutive years under section 80-IAC and exemption on capital and investments above Fair Market Value under section 56 of Income tax Act, 1961.

Eligibility Criteria for applying to Income Tax exemption (80-IAC):

√ The entity should be a recognized Startup

√ Only Private limited or a Limited Liability Partnership is eligible for Tax exemption under Section 80IAC

√ The Startup should have been incorporated after 1st April, 2016

Eligibility Criteria for Tax Exemption under Section 56 of the Income Tax Act:

√ The entity should be a DPIIT recognized Startup

√ Aggregate amount of paid up share capital and share premium of the Startup after the proposed issue of share, if any, does not exceed INR 25 Crore.

3. Easy Winding of Company: In 90 days under Insolvency & Bankruptcy Code, 2016.

4. Startup Patent Application & IPR Protection: Fast track patent application with up to 80% rebate in filling patents.

5. Easier Public Procurement Norms: Exemption from requirement of earnest money deposit, prior turnover and experience requirements in government tenders.

6. Small Industries Development Bank of India (SIDBI) Fund of Funds: Funds for investment into startups through Alternate Investment Funds.

What qualifies as a Startup under Startup India Scheme?

Registering on Startup India website

Registering a profile on the Startup India website is a fairly simple process.

1. Click on ‘Register’ and fill in the details as required in the registration form. An OTP will be sent to your registered email address, post submitting which your profile will get created.

2. You will have an option to select your profile type. For ‘Individuals’, the profile goes live immediately, whereas for ‘Startups’, the profile goes under moderation for 24-48 Hrs, post which you will be able to avail all benefits on www.startupindia.gov.in.

A Startup which has a profile on the Startup India website is considered a registered Startup on the portal. These Startups can apply for various acceleration, incubator/mentorship programmes and other challenges on the website along with getting an access to resources like Learning and Development Program, Government Schemes, State Polices for Startups, and pro-bono services.

For availing benefits under the Startup India Scheme (DIPP-recognition), the Startups have to apply at https://www.startupindia.gov.in/content/sih/en/startupgov/startup-recognition-page.html.

(Author of this post can be reached at [email protected] for any suggestions, comments and queries)