Launched by the Government of India, the Startup India Initiative is a movement that has revolutionized and transformed the landscape to create an environment that is conducive to fostering innovation and generating high levels of employment. Currently, India has established itself as the third-largest startup ecosystem in the world. While "starting up" is easy, availing benefits and incentives from the government is only possible after receiving the "seal of approval" from the Department for Promotion of Industry and Internal Trade (DPIIT). At Ruchi Anand & Associates, we are the "bridge" that can take your innovative idea and get it "recognized" as a "Startup."
Not all new businesses are eligible to be called a "Startup" as defined by the government. For your business to qualify, the five key conditions are as follows:
The business should be incorporated as a Private Limited Company, Registered Partnership Firm, or Limited Liability Partnership (LLP).
The business must have been incorporated within the last 10 years. (For deep tech startups, the time period has been relaxed to 20 years)
The total turnover must not have exceeded ₹100 Crore in any of the previous financial years since incorporation.
The business must not have resulted from the splitting or reconstructing of an existing business. The business must, therefore, be an original one, not formed by splitting or reconstructing an already established business.
This is the most important criterion. The business must aim to develop or improve products, processes, or services, or have high scalability with high wealth and job creation potential.
Startups can claim a 100% tax exemption for three consecutive years out of the first ten years of their operation.
Listed and recognized startups can claim exemption from tax on investments exceeding Fair Market Value (FMV).
Startups can claim up to an 80% rebate for patent filing and a 50% rebate for trademark filing. In addition, fast-track patent examination services are also available.
Startups can claim exemption from government inspections for compliance with 6 Labor Laws and 3 Environmental Laws for the first 5 years.
The government has eased regulations for government tenders for startups. Startups are now exempted from "prior turnover" and "prior experience" conditions.
The process of registering on the Startup India portal is a complex one. It requires a compelling narrative about your business model.
Ensure that you have your COI (Certificate of Incorporation) and PAN ready.
Create a profile on the Startup India website. This will help you to get your BHASKAR ID (Bharat Startup Knowledge Access Registry).
Fill out the "Get Recognized" form. This involves a detailed "Write-up" of 150-500 words about your innovation, problem solved, and scalability.
Upload your Pitch Deck, Website Link (if available), and your IPR certificates (if available).
Your application will be evaluated by the Inter-Ministerial Board (IMB). If approved, your Certificate of Recognition will be issued.
DPIIT recognition is one step, but the more rigorous and separate application is for the Section 80 IAC Tax Exemption.
The Startup India ecosystem provides more than just tax breaks; it provides capital:
No. You must convert to a Partnership, LLP, or Pvt Ltd first.
No, you must apply separately for Section 80-IAC and Section 56 exemptions after getting recognized.
No, but having an IPR or a unique technology significantly boosts your application's strength.
Startup India is an initiative of the Indian government launched in January 2016 to promote entrepreneurship and innovation in the country.
Startups registered under Startup India can avail of various benefits and incentives such as tax exemptions, funding support, simplified compliance procedures, and networking opportunities.
Any Indian citizen or entity that fulfills the eligibility criteria can apply for Startup India Scheme.
The startup should be less than 10 years old from the date of incorporation, except for startups in the biotechnology sector, which can be up to 15 years old.
The annual turnover of the startup should not exceed INR 100 crores in any of the previous financial years.
As per the scheme, a startup is defined as an entity that is incorporated or registered in India not more than 10 years ago and is working towards innovation, development, deployment, or commercialization of a new product, process, or service driven by technology or intellectual property.
To be considered innovative, a startup should be working on a product or service that is new or significantly improved compared to the existing ones in the market.
It is as much a story as it is a compliance process for registering a startup.
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