Several programs have been undertaken since the launch of the initiative on 16th of January, 2016 by Hon’ble Prime Minister, to contribute to his vision of transforming India into a country of job creators instead of job seekers. These programs have catalyzed the startup culture, with startups getting recognized through the Startup India initiative and many entrepreneurs availing the benefits of starting their own business in India.
An entity shall be considered as a Startup:
1. If it is incorporated as a private limited company or registered as a partnership firm or a limited liability partnership in India
2. It shall be considered as a Startup up to ten years from the date of its incorporation/registration
3. If its turnover for any of the financial years since incorporation/registration has not exceeded INR 100 Crores
4. If it is working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation
Note: An entity formed by splitting up or reconstruction of a business already in existence shall not be considered a ‘Startup’.
Scorecard for Startups
There are now more ways than ever for startups to find and connect with investors, through in-person events and online deal-closure platforms, but this also means that investors are seeing more companies than ever before. It is important for entrepreneurs to catch their attention as they may only have one chance to make a good first impression. Many startups reach out to investors before they even know how to make a sound and compelling investment case for their business and how to articulate that. Often even strong entrepreneurs with good ideas miss an investor’s attention, as they fail to present a compelling case to investors.
QRate score card provides entrepreneurs a detailed assessment report on their startup’s potential and investment worthiness.Much like a health check-up report from a diagnostic lab helps you identify problem areas and take corrective action to improve your health, the scorecard and assessment report provides startup founders actionable insights to help them strengthen their business plans and improve their chances of getting funded.
The benefits provided to recognized startups under the Startup India initiative are:
1. To promote awareness and adoption of IPRs by Startups the patent application of startups is fast-tracked for examination and disposal. The process is much faster for recognised Startups. Startups are provided with an 80% rebate in filing of patents vis-a-vis other companies, bringing down the cost from INR 8,000 to INR 1,600. This helps them cut down on costs in their early years. 50% rebate is also provided in filing of trademarks vis-a-vis other companies decreasing the cost from INR 10,000 to INR 5,000.
2. Startups are allowed to self-certify their compliance under 9 Labour and 3 Environment laws for a period of 3 to 5 years from the date of incorporation.
To reduce the regulatory burden on Startups, thereby allowing them to focus on their core business and keep compliance costs low.
3. Ministry of Corporate Affairs has notified Startups as ‘fast track firms’ enabling them to wind up operations within 90 days vis-a-vis 180 days for other companies. Startups with simple debt structures or those meeting such criteria as may be specified may be wound up within a period of 90 days from making of an application for winding up on a fast track basis.
4. The recognised startups that are granted an Inter-Ministerial Board Certificate are exempted from Income Tax for a period of 3 consecutive years out of 10 years since incorporation. Startups incorporated on or after 1st April 2016 but before 1st April 2022 can apply for income tax exemption under Section 80-IAC of the Income Tax Act.
5. A DPIIT recognized startup is eligible for exemption from the provisions of section 56(2)(viib) of the Income Tax Act.
Disclaimer:- The entire contents of this document have been prepared on the basis of relevant provisions and rules and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information.