What is a startup?
As per the revised notification G.S.R. 364(E), an entity will be considered as a startup if-
• It is a private limited company, registered as a partner firm or a limited liability partnership.
• It has a turnover of 100 crores or more, in any of the financial years of operation.
• If the company is working on the grounds of innovation, growth, development, or improvement of products and services
If you are new to the world of startups and have no idea about raising funds, then you need to make yourself familiar with these different stages first.
How to register your Startup with Startup India?
• First incorporate your business as a Private Limited Company or a Partnership firm or a Limited Liability Partnership.
• Then register with startup India (the process is simple, you need to login on the Startup India website and fill the form that needs details of your business and certain documents)
• Documents should be uploaded in the form of pdf
A letter of recommendation from an Incubator established in a post-graduate college in India, in a format specified by the Department of Industrial Policy and Promotion (DIPP) or a letter of support by an incubator, which is funded (about the project) by Government of India as part of any specified scheme to promote innovation; or a letter of funding of not less than 20% in equity, by any Incubation Fund/Angel Fund/Private Equity Fund/Accelerator/Angel Network, duly registered with SEBI that endorses innovative nature of the business; 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 also need to upload the certificate of incorporation of your company/LLP (Registration Certificate in case of a partnership).
• Short description of your brief.
• Mention if you want to avail the tax benefits.
• Startups are exempted from tax for 3 years. To avail this benefit, you should be certified by the inter-ministerial board.
• Finally, get recognition number. That’s it! On applying you will immediately get a recognition number for your Startup. The certificate of recognition will be issued after the examination of all your documents.
Startup India benefits
• IPR Benefits: Startup India provides access to high-quality Intellectual Property services and resources, including:
• Fast-tracking of Startup patent applications: The patent application of Startups is fast-tracked for examination and disposal.
• Panel of facilitators to assist in the filing of IP applications: A panel of Facilitators is responsible for providing general advisory on different IPRs as also information on protecting and promoting IPRs in other countries.
• Government to bear facilitation cost: Central Government bears the entire fees of the facilitators for any number of patents, trademarks or designs that a Startup may file, & Startups only bear the cost of the statutory fees payable.
• Rebate on the filing of application: Startups are provided with an 80% rebate in filing of patents vis-à-vis other companies. This helps them pare costs in the crucial formative years. 50% rebate is also provided in the filing of Trademarks vis-à-vis other companies.
Relaxation in Public Procurement Norms
All Government of India Ministries / Departments / Public Sector Undertakings has been authorised to relax norms in all public procurements, subject to meeting quality and technical specifications. Startups are entitled to avail exemption on:
• Prior Turnover and Experience.
• Earnest Money Deposit.
• Know more about the government tenders
DPIIT recognised Startups can now get listed as Sellers on the Government of India’s largest e-procurement portal – Government e-Marketplace!
Self-Certification under Labour and Environment Laws
To reduce the regulatory burden on Startups thereby allowing them to focus on their core business & keep compliance cost low, Startups are allowed to self-certify their compliance under 6 Labour and 3 Environment laws for a period of 5 years from the date of incorporation
In respect of 3 Environment laws, units operating under 36 white category industries (as published on the website of Central Pollution Control Board) do not require Environment clearance under 3 Environment-related Acts for 3 years.
Faster Exit for Startups
MCA has notified Startups as ‘fast track firms’ enabling them to wind up operations within 90 days vis-a-vis 180 days for other companies. An insolvency professional shall be appointed for the Startup, who shall be in charge of the company for liquidating its assets and paying its creditors within six months of filing an application in this regard.
Fund of Funds for Startups
To provide equity funding support for development and growth of innovation-driven enterprises, the Government has set aside a corpus fund of 10,000 crores managed by SIDBI. The Fund is in the nature of Fund of Funds, which means that the Government participates in the capital of SEBI registered Venture Funds, who further invest in Startups.
Tax Exemption for 3 years
The profits of recognised Startups that are granted an Inter-Ministerial Board Certificate are exempted from income-tax for a period of 3 years out of 7 years since incorporation. This fiscal
exemption is aimed at facilitating the growth of business and meeting the working capital requirements during the initial years of operations.
Tax Exemption on Investment above Fair Market Value
If a Startup, having a certificate from the Inter-Ministerial Board Certificate, receives any consideration for issue of shares that exceeds the face value of such shares, then the aggregate consideration, up to Rs. 25 Crore, received for such shares that exceed the fair market value of the shares is exempted from tax.