You must have heard about the Startup India Scheme which is a flagship program by the Government of India. Through this scheme, the government intends to propel sustainable economic development and enhance employment opportunities in India. Under the Startup India Action Plan, startups that meet the definition as prescribed under G.S.R. notification 127 (E) are eligible to apply for recognition under this program and be eligible to claim tax benefits under section 80IAC of the Income Tax Act subject to necessary approvals. Read on to get a, detailed direction to obtain startup recognition with the Department for Promotion of Industry and Internal Trade (DPIIT).
Listed below are the benefits of registering as a startup with DPIIT:
- A registered startup can avail of an exemption from payment of income tax for three consecutive years out of the first 10 years from the date of its incorporation. (Section 80IAC)
- Section 54GB relates to tax on long-term capitalgains received upon the sale of a residential property of an individual. The government has exempted individuals from payment of this tax if such long-term capital is invested in a registered startup. (Section 54(GB)
- A registered startup is allowed to self-certify their compliance under six labor laws and three environment laws. This is allowed for five years from the date of incorporation of the entity.
- The registered startups are eligible for INR. 10000 croreof funds from the Alternative Investment Funds.
- Public procurement refers to the process by which governments and state-owned enterprises purchase goods and services from the private sector. To allow startups to participate in public procurement, the eligibility conditions of prior turnover and/or demonstration of experience and security cover for projects have been exempted depending on the goods or services.
Find below the eligibility criteria:
- The entity should be incorporated as a private limited company (Pvt Ltd), registered as a partnership firm or a limited liability partnership (LLP).
- Turnover of the entity 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.
Note: An entity formed by splitting up or reconstruction of an existing business shall not be considered a “Startup”
Listed below is the procedure for registration:
Use your email ID and mobile number to create an account to register as a startup on https://www.startupindia.gov.in/
On creation of the account, complete the application for startup registration by providing the following documents:
- Certificate of incorporation or registration as the case maybe and email ID of the entity.
- Copy of PAN card of the entity.
- Name, Mobile Number and Email ID of the authorized signatory.
- Details of any awards/recognition received by the entity and the proof of the same.
- Brief note supporting innovative features of products/services.
- Note describing the problem that the startup is solves.
- Document to support how the startup proposes to solve the problem, including the followings:
- Uniqueness of the solution
- How does the startup generate revenue?
- of Employees (including founders)
- Is the startup creating a scalable business model for high potential of employment generation or wealth generation?
- In case the startup has any of the below mentioned recommendation letters, furnishing it would help to make the registration process simpler.
- Any patent filed and published in patent journals available online or offline;
- Recommendation letter from incubators who are established in post-graduation colleges in India;
- Support letter from any one of the startups which is funded through Central or State Government authorities or any incubator which is duly recognized by the Government of India;
- Letter of funding in an equity which should not be less than 20% by angel or incubation fund;
- Letter of recommendation (regarding innovative nature of business), from an incubator recognized by the Government of India in DIPP specified format.
- Letter of funding by the Government of India or any State Government as part of any specified scheme to promote innovation.
That’s it! On applying you will get a recognition number for your startup. The certificate of recognition would be issued after the examination of all your documents in due course. You will be able to download the system generated certificate of recognition from the Startup India portal.
