The Startup India initiative, launched by the Government of India, provides various benefits, including tax exemptions, funding support, and easier compliance for startups.
To register under Startup India, a business must meet the following eligibility criteria:
The business must be registered as:
⇒ Private Limited Company (PLC) under the Companies Act, 2013
⇒ Limited Liability Partnership (LLP) under the LLP Act, 2008
⇒ Partnership Firm registered under the Indian Partnership Act, 1932
2. Age of the Startup
⇒ The company must be less than 10 years old from the date of incorporation.
⇒ Partnership Firm registered under the Indian Partnership Act, 1932
3. Turnover Limit
⇒ The startup’s annual turnover must not exceed ₹100 crore in any of the financial years since incorporation.
4. Innovation & Scalability
⇒ The business should focus on innovation, improvement of products, processes, or services, or must have a scalable business model with high potential for employment generation or wealth creation.
⇒ Startups formed by splitting or reconstructing an existing business are NOT eligible.
5. DPIIT Recognition
⇒ The startup must obtain Department for Promotion of Industry and Internal Trade (DPIIT) Recognition to avail of Startup India benefits.
Benefits of Startup India Registration
1. Tax Benefits
Income Tax Exemption
⇒ Section 80-IAC Exemption – Startups recognized under Startup India are eligible for a 3-year tax holiday (exemption from income tax) in the first seven years of their operations.
Capital Gains Tax Exemption
⇒ Section 54GB Exemption – Exemption from capital gains tax for investments in startups, making it easier for investors to support new businesses.
Tax Deduction at Source (TDS) Exemption
⇒ No TDS on payments made to the startup for services, making it easier for startups to manage their cash flow.
2. Easier Compliance
Self-Certification for Labor & Environmental Laws
⇒ Startups can self-certify compliance with labor laws such as the Factories Act, Payment of Gratuity Act, and Employees’ Provident Fund, and environmental laws, reducing regulatory burdens.
Faster Approvals & Licenses
⇒ Fast-track clearances and approvals for specific permits, licenses, and registrations, making it easier for startups to focus on business operations instead of regulatory procedures.
3. Funding & Financial Support
Access to the ₹10,000 Crore Startup Fund
⇒ Government Fund for Startups – Access funding opportunities via a fund-of-funds scheme, where the government supports venture capital funds investing in startups.
Easier Angel & Venture Capital Investment
⇒ Exemption from Angel Tax – Startups raising funds from angel investors will not be taxed on their investments, encouraging more angel investors to support early-stage startups.
4. Intellectual Property (IP) Support
Fast-Track Patent Applications
⇒ 80% Fee Reduction on patent filing fees for startups to protect their intellectual property. This encourages startups to file patents for their innovations without worrying about high costs.
IPR (Intellectual Property Rights) Assistance
⇒ Support with Trademark and Patent Filing – Access to free legal and advisory services for IPR-related concerns.
5. Government Tender Benefits
⇒ Exclusive Access to Government Tenders – Startups get access to government procurement and tenders specifically reserved for them, enhancing business opportunities.
6. Networking & Mentorship
⇒ Incubation & Acceleration Support – Government-backed incubation centers offer guidance, office space, and resources to startups to help them scale faster.
⇒ Networking Opportunities – The platform provides access to a vast network of mentors, investors, and other entrepreneurs for collaborative growth.
7. Easy Exit Mechanism
⇒ Fast Exit Process – Startups can now shut down easily within 90 days of the application for closure, unlike the regular process that takes much longer.
8. Market Access & Visibility
⇒ Brand Recognition – The Startup India platform provides national visibility and credibility, making it easier to connect with investors, customers, and other stakeholders.
⇒ Global Outreach – Startups also have the opportunity to showcase their products at global forums and exhibitions organized by the Government of India.
9. Regulatory Relaxation for the First 7 Years
⇒ Relaxed Labor Laws – Startups can operate with flexibility in terms of labor laws, reducing compliance burdens for the first few years.
10. Ease of Operations for Foreign Investors
⇒ Attractive for Foreign Investment – The benefits and ease of doing business under the Startup India scheme make it a favorable destination for foreign investors looking to invest in Indian startups.
Documents required for Startup India Registration
1. Business Entity Documents
For Private Limited Company
⇒ Certificate of Incorporation – Proof of registration as a Private Limited Company.
⇒ Memorandum of Association (MoA) & Articles of Association (AoA) – These documents outline the purpose and internal rules of the company.
⇒ CPAN Card of the Company – A mandatory document for company registration.
⇒ GST Registration (if applicable) – GST registration is required if your turnover exceeds the prescribed limit.
For Limited Liability Partnership (LLP)
⇒ Certificate of Incorporation – Proof of LLP registration.
⇒ LLP Agreement – This document specifies the rights and duties of the partners in the LLP.
⇒ PAN Card of the LLP – For tax purposes and company registration.
⇒ GST Registration (if applicable).
For Partnership firm
⇒ Partnership Deed – This is an agreement between the partners.
⇒ PAN Card of the Firm.
⇒ GST Registration (if applicable).
2. Director/Partner/Proprietor Details
For all Directors, Partners, or Proprietor
⇒ Aadhaar Card – Proof of identity and address.
⇒ PAN Card – For tax purposes and to verify the identity of the directors/partners/proprietor.
⇒ Passport-size Photographs – Recent passport-sized photographs of directors/partners/proprietor.
⇒ Email ID & Contact Number – For communication and notifications.
3. Nature of Business
⇒ Brief Description of Business Activities – A concise description of the products or services offered by the startup, including how it is innovative or scalable.
4. Certification of Eligibility
⇒ Self-certification that the business is not more than 10 years old – The startup must be less than 10 years old from its date of incorporation.
⇒ Annual Turnover Proof – The turnover of the startup should not exceed ₹100 crores in any of the previous financial years..
5. Bank Account Details
⇒ Bank Account Statement – Proof of an active business bank account in the name of the company/LLP/partnership firm.
6. DPIIT (Department for Promotion of Industry and Internal Trade) Recognition Application
⇒ Startup Recognition Form – To obtain recognition from DPIIT, the form must be filled and submitted online.
7. Additional Documents (if applicable)
⇒ Proof of Innovation/Scalability – A brief description or document showing the innovative nature of your product or service and its potential for growth.
⇒ Patent/Trademark Application – If your startup involves innovations, providing evidence of a patent or trademark filing can enhance your application.