Under the Startup India scheme the government has taken several vital steps for building a robust startup ecosystem and making India a country of job creators instead of job seekers.
OVERVIEW OF THE STARTUP INDIA SCHEME:
Launched in 2016, the Startup India Scheme is an initiative taken by the Government of India. The main objective of the scheme is to promote the startup ecosystem, generate employment, and create wealth. The Startup India scheme has come up with several benefits such as ease of work, financial support, government tender, networking opportunities, income tax benefits, etc.
ELIGIBILITY CRITERIA FOR STARTUP RECOGNITION:
- The Startup should be incorporated as a private limited company or registered as a partnership firm or a limited liability partnership
- Turnover should be less than INR 100 Crores in any of the previous financial years
- An entity shall be considered as a startup up to 10 years from the date of its incorporation
- The Startup should be working towards innovation/ improvement of existing products, services and processes and should have the potential to generate employment/ create wealth.
- An entity formed by splitting up or reconsutrctuon of an existing business shall not be considered a "Startup"
BENEFITS OF STARTUP RECOGNITION
- Self Certification
- Startup Patent Application & IPR Aplication
- Tax Exemption under 80IAC
- Angel Tax Exemption – Under Section 56 Exemption
- Easy Winding up of Company
- Easy Public Procurement Norms
1. SELF CERTIFICATION
- Startups shall be allowed to be self-certify compliance for 6 Labour Laws and 3 Environmental Laws through an online procedure.
- In the case of labour laws, no inspections will be conducted for a period of 5 years. Startups may be inspected only on receipt of credible and verifiable complaint of violation, filed in writing and approved by at least one level senior to the inspecting officer.
- In the case of environment laws, startups which fall under the ‘white category’ (as defined by the Central Pollution Control Board (CPCB)) would be able to self-certify compliance and only random checks would be carried out in such cases
2. STARTUP PATENT APPLICATION & IPR APLICATION
- Fast-tracking of Startup Patent Applications:
- Panel of facilitators to assist in filing of IP applications:
- Government to bear facilitation cost
- Upto 80% rebate on filing of application
3. TAX EXEMPTION UNDER 80IAC
Eligible startups can be exempted from paying income tax for 3 consecutive financial years out of their first ten years since incorporation
- The entity should be a DPIIT recognised startup
- Only Private Limited Companies or Limited Liability Partnerships are eligible for tax exemption under Section 80IA
- The startup should have been incorporated after 1st April, 2016.
- Memorandum of Association for Pvt. Ltd. / LLP Deed
- Board Resolution
- Annual Accounts of the startup for the last three financial years
- Income Tax returns for the last three financial years
- Declaration – to be drafted by us.
- Details of the product/service
- USP of the startup
- Revenue model
- Funding received from private investors or Angel/VC funds
- If any support (monetary/non-monetary) is received from Central or State Government
- Details of any public or private sector awards won by the startup
- Number of people directly employed with your startup
- Link to your startup’s website
- Screenshots/images of your product/website
4. TAX EXEMPTION UNDER SECTION 56 OF THE INCOME TAX ACT (ANGEL TAX)
Post getting recognition a Startup may apply for Angel Tax Exemption.
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.
5. EXIT OPTION
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.
- Mergers & Acquisitions
- Initial Public Offering (IPO)
- Selling Shares
6. EASY PUBLIC PROCUREMENT NORMS
- Opportunity to list your product on Government e-Marketplace
- Exemption from Prior Experience/Turnover
- DPIIT recognised startups have been exempted from submitting Earnest Money Deposit (EMD) or bid security while filling government tenders.