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START UP INDIA

The “Start-up India” initiative, launched by the Government of India in January 2016, aims to promote entrepreneurship, foster innovation, and support the growth of start-ups in India. It provides a conducive environment for start-ups to scale up, with a focus on boosting job creation, economic growth, and fostering a robust entrepreneurial ecosystem.

To be eligible for benefits under the “Start-up India” scheme, a business must meet certain criteria as defined by the Government of India. Here’s an overview of the eligibility requirements and the compliance norms:

ELIGIBILITY CRITERIA FOR START-UPS UNDER START-UP INDIA

  1. Incorporation and Legal Form:
  • The start-up must be incorporated as a private limited company, registered partnership firm, or limited liability partnership (LLP).
  • It should be incorporated or registered in India.
  1. Age of the Entity:
  • The start-up must be less than 10 years old from the date of incorporation.
  1. Annual Turnover:
  • The annual turnover of the entity must not have exceeded INR 100 crore in any financial year since its incorporation.
  1. Innovation and Scalability:
  • The business should be working towards innovation, development, or improvement of products, processes, or services, or if it is a scalable business model with a high potential for employment generation or wealth creation.
  • It should not be formed by splitting up or restructuring an already existing business.
  1. Recognition by DPIIT:
  • To avail benefits under the Start-up India scheme, the entity must be recognized by the Department for Promotion of Industry and Internal Trade (DPIIT).

HOW TO GET DPIIT RECOGNITION

To be officially recognized as a start-up by DPIIT under the Start-up India initiative, an entity must follow these steps:

  1. Apply Online: Submit an application via the Startup India Portal (startupindia.gov.in).
  2. Required Documents:
  • Certificate of incorporation or registration.
  • Description of how the entity is working on innovation or improving a product/service.
  • Supporting documents like patents (if applicable).
  1. Acceptance: Upon verification, DPIIT will issue a recognition certificate, making the entity eligible for various benefits.

COMPLIANCE REQUIREMENTS FOR START-UPS

  1. Self-Certification:
  • Start-ups can self-certify compliance with **nine labour and environmental laws** . This helps reduce the regulatory burden and allows the start-up to focus on its core activities.
  • The self-certification can be done for three to five years from the date of incorporation, depending on the type of law.
  1. Annual Reporting:
  • Start-ups must file annual reports and financial statements with the Ministry of Corporate Affairs (MCA) and the Registrar of Companies (RoC), in accordance with the Companies Act, 2013 or respective laws.
  1. Income Tax Returns:
  • Although eligible start-ups enjoy tax benefits, they must still file their income tax returns annually with the Income Tax Department.
  1. Intellectual Property Rights (IPR) Compliance:
  • If the start-up is availing of the IPR benefits, they must adhere to the regulatory requirements of the Intellectual Property Office in India, including timely filing and reporting.
  1. Public Procurement Norms:
  • Start-ups participating in government tenders must adhere to the rules and compliance requirements laid out in the General Financial Rules (GFR), 2017.
  1. Compliance with the Companies Act and Tax Laws:
  • Start-ups must ensure they comply with all the provisions of the Companies Act, Income Tax Act, and Goods and Services Tax (GST) laws, where applicable.

HERE ARE THE KEY BENEFITS AVAILABLE UNDER THE INITIATIVE:

  1. Simplification and Handholding
  • Startup India Hub: A dedicated online platform providing mentorship, resources, and networking opportunities.
  • Self-Certification Compliance: Start-ups can self-certify their compliance with labor and environmental laws, reducing regulatory burden.
  • Startup India Mobile App: Simplifies the process of applying for recognition, tracking benefits, and accessing various government schemes.
  • Easy Exit: Start-ups can be wound up easily within 90 days from the application of insolvency.

  1. Funding and Incentives
  • Fund of Funds for Startups (FFS): A corpus of INR 10,000 crore (managed by SIDBI) aimed at providing funding support to start-ups. The government contributes to Alternative Investment Funds (AIFs) that invest in start-ups.
  • Tax Exemptions:
    • Income Tax Holiday: Start-ups are eligible for a tax holiday for three consecutive financial years out of their first ten years since incorporation.
    • Exemption from Capital Gains Tax: Start-ups are exempted from paying capital gains tax, making investments in them more attractive.
    • Angel Tax Exemption: Investments above the fair market value made by angel investors are exempted from taxation.

  1. Industry-Academia Partnership and Incubation
  • Research & Innovation Support: Start-ups are provided with access to high-quality research through the Atal Innovation Mission (AIM), which promotes innovation hubs and incubation centers.
  • Incubation Centers: Government-supported incubation centers provide mentoring, workspace, and technical support for start-ups.
  • Innovation Challenges: Various government ministries and departments provide opportunities for start-ups to participate in public problem-solving challenges.

 

  1. Access to International Markets
  • Government Tenders: Start-ups can bid for government projects without the requirement of prior experience or turnover.
  • Intellectual Property (IP) Benefits: Start-ups get up to 80% rebate on patent filing fees and 50% on trademark filing fees. They also get fast-tracked examination of patent applications.

  1. Government Schemes Supporting Start-ups
  • Credit Guarantee Scheme for Start-ups (CGSS): Provides collateral-free loans to start-ups from banks and financial institutions.
  • Stand-Up India: Specifically aimed at promoting entrepreneurship among women and SC/ST communities by offering loans ranging from INR 10 lakh to INR 1 crore.

The Start-up India initiative helps foster an environment where innovative businesses can thrive, facilitating job creation and enhancing the nation’s global competitiveness.

In conclusion, start-ups seeking to benefit from the Start-up India scheme must comply with regulatory, financial, and legal norms, while also fulfilling the eligibility criteria to gain access to the advantages offered by the government.