Startup India Scheme was launched by Government of India on January 16, 2016 to support entrepreneurs and create jobs. The very objective of the Scheme was to build a strong ecosystem for promoting innovation and startups in the country.
Now, the Department for Promotion of Industry and Internal Trade (DPIIT) defines startup under the scheme.
What is a Startup?
A ‘Startup’ is an entity that
- is into existence for upto 10 years from the date of its incorporation or registration. Provided such an entity is incorporated in India as a:
- has a turnover that is not more than Rs 100 crores during any of the financial years since incorporation or registration
- is working towards innovation, development or improvement of products or services or processes. Or the entity has a scalable business model having a high potential of employment generation or wealth creation
Now, there are a host of benefits provided to the startups under the Scheme. These include:
- Self Certification under Labour and Environmental Laws
- Tax exemption for three years
- Tax exemption on investment above fair market value
- Startup patent application and IPR protection
- Easy winding up of the company
However, in order to avail such benefits, it is mandatory for startups to be recognized by DPIIT.
So, if you want to register for the Startup India Scheme, you need to adopt the following Startup India Registration procedure.
Procedure For Startup India Registration
1. Get Your Business Registered
The first step to register with startup India is to register your business entity as a Pvt Ltd Company, a partnership firm or an LLP.
Further, you need to comply with all the provisions required for getting a business registered like obtaining a certificate of registration, PAN card and other necessary compliance.
2. Register Your Business Entity with Startup India
After getting your business entity incorporated, the next step is to get it registered as a startup. The process for the registration of a startup is quite simple and is done online.
For this, you need to log onto the Startup India website https://www.startupindia.gov.in. Then you need to fill up the form giving details of your business and uploading certain documents.
3. Documents to be Uploaded (in PDF Format Only)
A Letter of Recommendation/Support
A letter of recommendation must be proposed along with the registration form from any of the following:
- an Incubator established in a post-graduate college in India has to provide a recommendation (regarding innovative nature of business) form in a format specified by the Department of Industrial Policy and Promotion (DIPP) or
- a letter of support by an incubator, which is funded (in relation to the project) by Government of India as part of any specified scheme to promote innovation or
- an Incubator recognized by the Government of India has to provide a letter of recommendation (regarding innovative nature of business) in DIPP specified format or
- any Incubation Fund/Angel Fund/Private Equity Fund/Accelerator/Angel Network with not less than 20% in equity, duly registered with SEBI that endorses innovative nature of the business has A letter of funding or
- a letter of funding by Government of India or any State Government as part of any specified scheme to promote innovation or
- a patent filed and published in the Journal by the Indian Patent Office in areas affiliated with the nature of the business being promoted.
You need to upload the certificate of incorporation of your company/LLP (Registration Certificate in case of partnership)
Description of your business in brief
You need to provide a brief description of the innovative nature of your products/services.
4. Answer the Question if you Would Like to Avail Tax Benefits
Under the Startup India Scheme, the profits earned by the recognized startups are exempted from income tax for a consecutive period of three years. But in order to avail this benefit the startups must be certified by the Inter Ministerial Board (IMB).
However, startups recognized by DIPP, Government of India can now directly avail IPR related benefits without requiring any additional certificate from IMB.
5. Self Certification
The recognized startups must self certify that they will satisfy all the following conditions:
- they are registered either as a Pvt Ltd Company, Partnership Firm or Limited Liability Partnership Firm
- their business must be incorporated or registered in India for upto 10 years from the date of incorporation
- they must have a turnover that is not more than Rs 100 crores during any of the financial years since incorporation or registration
- these must be working towards innovation, development or improvement of products or services or processes. Or the entity has a scalable business model having a high potential of employment generation or wealth creation.
- they are not created by splitting or reconstructing an existing business unit
6. Get Recognition Number
Once you apply, you will receive a recognition number for your startup. However, you will be issued a certificate of recognition only after all of your documents are examined.
Furthermore, you must be careful while uploading any of the documents on the portal. In case of a subsequent verification it is found that a required document is not uploaded or wrong document is uploaded or forged document has been uploaded, then you shall be liable to give a fine.
Such a fine would be restricted to 50% of the paid up capital of your startup. However, the minimum amount of fine is limited upto Rs. 25,000.
7. Other Areas
Patent or IPR Application
In case you need to apply for a patent for your innovation or trademark for your business you should reach out an appropriate facilitator depending upon your desired sector and jurisdiction of the facilitators.
These facilitators will provide you with up to date information about the process and documents required for a patent or trademark application.
Thus, the Startup India Portal provides a list of Trademark facilitators and Patent facilitators. In this case, you will only have to bear the statutory fees, thus availing 80% reduction in fees.
One of the major challenges faced by startups is to raise funds for their innovation or business idea. Further, the entrepreneurs are unable to get investors on board given their lack of experience, security or existing cash flows.
Besides this, the investors hesitate to invest in startups as they are highly risky as well as many of them fail to continue. Hence, to provide support to the startups the government of India has set up a fund for startups with an initial corpus of Rs. 25,00 crores and a total corpus of Rs. 10,000 crores over a span of four years.
Further, the nature of such a fund is fund of funds. This fund is managed by SIDBI and is intended to provide equity funding support for the development and growth of innovation driven enterprises. The nature of such a corpus is fund of funds.
This means that the government contributes towards the capital of SEBI registered funds. These funds further invest in startups.