Startup India Registration

Startup India Registration: A Guide to India’s Startup Initiative

In 2016, the Government of India launched the Startup India scheme with a primary goal: to nurture the growth of startups across the country. Through this initiative, the government has implemented crucial measures to establish a robust startup ecosystem, transforming India into a hub of job creators rather than job seekers. The Department for Industrial Policy and Promotion (DPIIT) oversees the programs under the Startup India Scheme.

A startup, typically a small business, emerges when an individual or a group of people introduces a novel product or service that isn’t readily available elsewhere. These ventures are driven by the spirit of innovation, contributing to the expansion of job opportunities within the Indian economy.

What is a Startup?

A startup refers to a recently established business, typically small in scale, initiated by an individual or a group of people. What sets startups apart from other new organizations is their focus on offering a novel product or service that isn’t readily available elsewhere. These ventures are driven by the twin motives of innovation and development.

To qualify as a startup and avail the benefits provided by the Department for Industrial Policy and Promotion (DPIIT), a company must meet the following criteria:

1. Age of the Company: The company’s date of incorporation should not exceed 10 years.
2. Type of Company: The startup can be either a Private Limited Company under the Companies Act, 2013, or registered under the Indian Partnership Act, 1932 as a Partnership Firm, or registered under the Limited Liability Partnership Act, 2008 as a Limited Liability Partnership Firm.
3. Turnover Limit: The company’s annual turnover should not exceed Rs. 100 crores since its incorporation for any of the financial years.
4. New Business Entity: The business must be genuinely new and not a result of splitting or restructuring an existing business.
5. Innovation-Friendly: The startup should be actively engaged in innovation, developing new products or services, or enhancing existing ones. The business model should demonstrate high potential for creating wealth and generating employment.
6. DIPP Certificate: Obtaining a certificate from the Inter-Ministerial Board, set up by the Department of Industrial Policy and Promotion, is essential for startup recognition.

Benefits of registration under Startup India Scheme

Tax Benefits:

• Startups registered under the Startup India program enjoy a three-year exemption from income tax.
• Specific exemptions are available under Section 80IAC and Section 56 for Angel Tax relief.

Tender Participation:

• Government and public sector undertakings (PSUs) provide relaxations for startups in various tenders.
• Startups can actively participate in public procurement opportunities through tender processes.
• Additional benefits include relaxation in previous experience requirements, Earnest Money Deposit (EMD), and turnover criteria.

Government Funding Opportunities:

• The government has allocated Rs. 10,000 crores through Alternate Investment Funds for investing in startups.
• The Small Industries Development Bank of India (SIDBI) manages this fund, and all eligible startups can apply for funding.

Participation in Government Schemes:

• Various government schemes are regularly issued to motivate startups.
• These schemes cover areas such as raw material assistance, sustainable finance, and facilitation of bank credit.

Startup Grand Challenges:

• Reputed companies encourage startup entrepreneurs to participate in solving business challenges.
• Participation provides an opportunity for startups to earn additional funding.
• Companies like WhatsApp, Aditya Birla, and Mahindra actively engage with startups to offer financial assistance.

Streamlined Winding Up Process:

• The process of winding up a company becomes easier and typically takes 90 days under the Insolvency & Bankruptcy Code 2016.

Networking Opportunities:

• Startups benefit from building networks and connecting with larger companies.
• These connections provide mentorship opportunities and access to investors and industry expertise.

Self-Certification:

• Startups can self-certify compliance with various labour laws and environmental regulations.

Rebates:

• Startups receive an 80% rebate on patent application filing.
• Additionally, there is a 50% rebate on trademark filing for startups under this scheme.

Business Opportunities:

• Startup India serves as a platform that offers multiple opportunities, recognition, and support to hardworking startups aiming to carve out their niche in the market.

How DPIIT is beneficial for you

Once you’ve created a profile on the Startup India website, the next crucial step is to seek recognition from the Department for Promotion of Industry and Internal Trade (DPIIT). This recognition opens up a world of benefits for startups, including access to high-quality intellectual property services, streamlined company winding-up procedures, self-certification advantages under environmental and labor laws, relaxed norms for public procurement, and access to funds through the Fund of Funds. Additionally, DPIIT-registered companies enjoy tax exemptions for three consecutive years and are exempt from taxes on investments above fair market value.

1. Simplification and Handholding:
   • Compliance processes are now more straightforward, and there’s an efficient exit process for startups that face challenges.
   • Legal support has become more accessible, ensuring smoother operations.
2. Funding and Incentives:
   • Startups benefit from exemptions on income tax and capital gains tax.
   • Funds are raised to infuse additional capital into these innovative ventures.
3. Incubation and Industry-Academia Partnership:
   • The startup ecosystem is enriched through the establishment of more incubators and innovative labs.
   • Events, competitions, and grants foster collaboration between startups and academia, driving further growth.

Startup India Registration Process

Before proceeding to the startup India registration process, you must check the eligibility for startup India registration:

Eligibility for Startup India Registration

1. The organization must be either a private limited company or a limited liability partnership (LLP).
2. The enterprise should not have completed ten years from the date of incorporation or registration.
3. Annual turnover should not exceed Rs. 100 crores for any financial year since incorporation.
4. The startup must be working towards development, innovation, or improvement of services or processes with the goal of generating employment or creating wealth.
5. Crucially, the startup must not be formed by reconstructing or splitting up an existing business.
6. Approval from the Department of Industrial Policy and Promotion (DIPP) is necessary.
7. To obtain DIPP approval, the firm should be supported by an Incubation Fund, Angel Fund, or Private Equity Fund.
8. The startup must have a supporter guarantee from the Indian Patent and Trademark Office.
9. A proposal letter by incubation is required.
10. Capital increase is excluded from income tax under the Startup India scheme.
11. The firm should focus on providing innovative ideas, products, or services.
12. Angel funds, incubation funds, accelerators, private equity funds, and angel networks should be registered under SEBI (Securities and Exchange Board of India).

Now let’s move to the registration process:

Registering for Startup India

Business Incorporation Stage:

If your organization is neither incorporated nor registered as a proprietorship, you must choose one of the following business forms:

1. Private Limited Company
2. Limited Liability Partnership (LLP)
3. Registered Partnership Firm

No additional registration step is needed under the Startup India program during the incorporation process.

Initiate the Startup India Registration Process:

The Startup India registration process is available online. Follow these steps:

1. Register your company on the Shram Suvidha Portal, owned by the Ministry of Labour and Employment.
2. Log in to the portal.
3. Click on the link that asks, “Is Any of Your Establishment a Startup?”
4. Follow the instructions to complete the registration.

Additionally, startups need to fill out a form related to their business operations and future goals.

Get DPIIT Recognition:

1. After creating a profile on the Startup India website, seek recognition from the Department for Promotion of Industry and Internal Trade (DPIIT).
2. DPIIT recognition provides access to benefits such as high-quality intellectual property services.
3. Apply for recognition by filling out the startup recognition form and submitting it.

Submit the Required Documents for Registration.

Other Details About the Startup in Brief:

1. Submit a brief description of your business activities, including details about your product or service.
2. Prove that your business is innovative and actively involved in solving a problem or improving an existing service.

Note that the registration process for Startup India is straightforward and designed to support and promote the Indian startup ecosystem.