Benefits to register as a startup in India & eligibility criteria

Our economy has seen so much growth in the last few years and one of the reasons behind this growth is the expansion of startups in India.  A few years back the government of India had announced the Startup India campaign which aims to promote the growth of Indian startups. Since then the Indian government has introduced many benefits for businesses that register as a startup in India. Today, in this article we are going to discuss some of those benefits. Also, we would explain what is the eligibility criteria to recognized as a startup in India & what prerequisite documents are required to get startup recognition to avail the benefits.

Benefits provided by the Indian government to startups registered in India.

Self-Certification - Recognized startups shall be allowed to self-certify compliance for six Labour Laws and three Environmental Laws through a simple online procedure.

Patent Process - Patent applications filed by recognized startups shall be fast-tracked and the rebate on filing applications up to 80% is also provided by the government.. Also, a panel of facilitators is empanelled to provide assistance to Indian startups in filing IP applications and the facilitation shall be borne by the government.

Income Tax Exemption - Recognized eligible startups can avail 100% tax exemption for three consecutive financial years out of the first ten years from the date of its incorporation under Section 80-IAC of Income Tax Act, 1961.

Tax Exemption on Investments - The government has specified that in case investments made into recognized eligible startups exceed the Fair Market value, then tax shall be exempted on such investments as per section 56(2)(viib) of Income Tax Act, 1961.

Simple Winding-up Process - In case losses are incurred and the startup company decides to wind up then it can be wound up under the Insolvency and Bankruptcy Code, 2016 within 90 days of filing an application for insolvency.

Online Marketplace - The government of India has provided an opportunity to recognize eligible startups to directly sell their products on the Government e-Marketplace (GeM).

Relaxation to manufacturing startups - Startups in the manufacturing sector are exempted from Prior Experience/Turnover while applying for any government projects or tenders. Also, recognized startups are exempted from depositing bid security amounts while filing government tenders.

Easy Funding - The government has set up a fund of Rupees 10,000 crore to provide funds to the startups as venture capital.  The government is also giving guarantees to the lending banks or financial institutions and encouraging them to provide funding to startups.

There are many other benefits as well for registering your entity as an Indian startup.

Now, let’s understand 

What is the eligibility criteria to be recognized as a startup in India?

Under the Startup India Action Plan, the government of India has set up certain conditions that need to be fulfilled in order to be recognized as an “Eligible Startup”, such conditions are given as below:-

1. Type of an entity - To qualify as an eligible startup an entity should be incorporated as a Private Limited Company or a Registered Partnership Firm or an LLP (Limited Liability Partnership Firm).
2. Turnover limit - The annual turnover of a business should be less than INR 100 Crores in any of the financial years since its incorporation.
3. Entity age - The entity should be not older than 10 years i.e, an entity shall be considered as a startup up to 10 years only since its date of incorporation.
4. Original entity - The entity should not have been formed from an existing business.
5. Nature of business - The nature of business should be innovative. The business model should be scalable with a high potential for employment generation or wealth creation.

Further, approval from DIPP (Department of Industrial Policy and Promotion) should be obtained to get startup recognition. To avail that approval an entity can apply online through www.startupindia.gov.in or via a mobile app set up by the DPIIT (Department for Promotion of Industry and Internal Trade). At the time of processing the application for getting startup recognition following pre-requisite documents are needed:-

1. Incorporation Certificate or Registration Certificate of the entity.
2. A brief description explaining the nature of the business.
3. PAN details.
4. Director details.
5. Patent or trademark details (if any).
6. In case of validation, early traction, or a staged startup, the written proof is needed to be related to entity business like the official website link or pitch deck.
7. Letter of funding and letter of recommendation from incubators (optional)
8. Any other document (as notified by the government from time to time)

If you are a founder of an early-stage startup and want to get registered as a recognized eligible startup with the Indian government to avail the benefits then book a consultation call with our team of experts right away. We are here to guide you and complete all the formalities.

Please feel free to get in touch with us, if you have any questions or queries related to startup registration in India.

Startup Registration Support Number for India 

Our Startup Registration Support Number, +91 63956 22281, is available to help you register your startup smoothly and legally.