GET IN TOUCH
With an aim to generate more and more employment opportunities and creating wealth, the Central Government of India has launched an initiative called Start-up India Scheme. The scheme offers a number of benefits to all such start-ups that register under it. Hence, Start-ups are becoming quite popular in India to develop the Indian economy. A start-up is usually a small establishment business to develop a current product/service into something better. Accordingly, a start-up can be incorporated and registered in India as:
- Private Limited Company, or
- Limited Liability Partnership, or
- Partnership Firm
Please note that that the annual turnover of a start-up must not exceed Rs. 100 crores during any of the financial years of 10 years since its incorporation, to be recognized as the start-up. Hence, an entity shall cease to be a start-up:
- On completion of 10 years since incorporation
- In case its turnover exceeds Rs. 100 years during any of the previous year
In case you are also planning to register a start-up or a new company in India then you need to register it with the Ministry of Corporate Affairs (MCA). You need not visit the corporate office for registration as it can be done through Registration SEVA while sitting at home. The registration includes Digital Signature Certificate(DSC), Director Identity Number(DIN) and filing for an e-form.
The Department of Industrial Policy & Promotion (DIPP) is responsible for the overall Industrial Policy, formulation and implementation of promotional and developmental measures for growth of the industrial sector, keeping in view the national priorities and socio-economic objectives.
The Start-up India scheme has been launched by our Prime Minister Shri Narendra Modi on 16th January 2016 to give financial, taxation and a lot of other benefits that come as a great business opportunity. Let’s have a look at the various advantages of Start-up registration:
- Exemption from income Tax
- Exemption from Angel Tax
- Helps in the participation of various government schemes
- Self-Certification facility
- Rebate in Trademark and Patent Filing
- Faster Exit
Now we shall learn the advantages in detail
- Exemption from Income Tax
Any entity which is registered under the Start-up India Scheme can apply for an exemption in Income Tax under Section 80 IAC of the Income Tax Act for 3 consecutive financial years out of the first 10 years from the date of incorporation.
Note: Such exemption can only be claimed if the entity is first registered as a Private Limited Company or an LLP and must be incorporated between 1st April 2016 to 1st April 2021.
- Exemption from Angel Tax
Angel investment is taxable. But since, start-ups are mainly funded through Angel Investment. Hence, to increase the funding for start-ups, the government has exempted the registered start-ups from the tax applicable on Angel investment. The exemption in such tax is granted up to the total amount of paid-up share capital. Also, the share premium must not exceed Rs. 25 crores after the proposed issue of share.
- Participation in various Government Schemes/Tenders
Registration in various government schemes like DIPP recognition scheme etc. helps start-ups to apply for further government tenders. To apply for government tenders, the applicant must fulfill the criteria like a requirement of minimum capital or turnover or experience, etc. However, if the entity is a Start-up then it can apply for specified tenders even it does not fulfill such requirements.
Start-ups can self-certify all the compliance under 6 Labour Laws and 3 Environmental Laws for 5 years from its date of incorporation.
- Rebate in Trademark and Patent Filing
Start-ups are eligible to claim the rebate on the government fees for filing trademark and patent applications. While filing, start-ups will be provided an 80% rebate in a patent application and 50% on trademark applications. Hence, start-ups need to bear only the cost of statutory fees.
- Faster Exit
The start-up entities registered under the Ministry of Corporate Affairs (MCA) i.e. A Private Limited Company and an LLP c be wound up on a fast track basis. Under the Insolvency and Bankruptcy Code,2016, Start-ups with simple debt structure or those meeting certain income specified criteria can be wound up within 90 days of filing an application for insolvency.
Start-up recognition is granted by the Department of Industrial policy and Promotion (DIPP) and approval in regards to tax benefits shall be provided by the inter-ministerial board of certification.
Following checklist needs to be taken care of before you proceed for Start-up Registration under Start up India Scheme of Indian Government:
- The proposed entity needs to be either a Private Limited Company or a LLP.
- The company needs to remain a start-up for at least the first 10 years from the date of its incorporation
- The company will remain a start-up if the turnover per year does not cross the Rs 100 crore mark in any of the 10 years. Once the company crosses the mark, it no longer remains eligible to be called a start-up.
- The entity must get approval from the Department of Industrial Policy and Promotion (DIPP)
- The proposed start-up must have innovative ideas and schemes.
All the details regarding the funding must be registered with SEBI (Securities and Exchange Board of India)
Following documents are required for a Start-up Registration:
- Anyone of the following letter of recommendation:
- A Recommendation letter from an incubator known in a post-graduate college in India, in a format approved by the DIPP, or
- A letter from any of the Incubators, recognized by the Government of India, in DIPP format, or
- A letter of funding not less than 20% in equity, by an Incubation Fund, Private Equity Fund, Angel Fund, Accelerator, Private Equity Fund, registered with SEBI that endorses the innovative nature of business; or
- A recommendation letter by the Central or any State Government of India; or
- A patent filed and published in the Journal of Indian Patent Office in areas affiliated with the nature of the business being promoted.
- Certificate of Incorporation or registration certificate
- PAN card
- MOA & AOA in case of company and Partnership deed for LLP & Partnership firm
- List of all directors/members/partners along with their email id and photograph
- URL link of a website and social profile of the entity
- URL link of the social profile of directors/members/partners
- Information related to IPR in the name of the entity if it has registered any IPR or it is in the process of registration
- Information related to funds if the entity has availed any fund from investors
- If the entity has received an award or certificate of recognition, then such information needs to be provided
Following are the step by step process for Start-up registration:
Step 1: Incorporate your Start-up Business
The very first step is that you need to first register your business as a Private Limited Company or a Partnership Firm or as an LLP depending upon certain criteria like staff, the scale of operations and other related aspects.
The procedure for incorporation is the same as any other normal online company incorporation through MCA. You can contact Registration SEVA for the same. Hence, get a Certificate of Incorporation with PAN and TAN for your proposed entity.
Step 2: Register your business with Start-up India
The second and one of the most important steps is to get your company or business registered as a Start-up. You need to visit the official website of Start-up India.e. “startupindia.gov.in”, post which you need to fill-up the form in the prescribed format with all the necessary details of your business along with uploading of certain important documents.
Step 3: Upload necessary documents
Along with the Registration Form, you need to submit any one of the recommendation letters as discussed above and further also upload Certificate of Incorporation of your company/LLP or the Registration Certificate in case of the partnership firm.
Step 4: Fill details about the start-up
A detailed description of the business, describing the innovative nature of your products/services also needs to be uploaded. The start-up should give information to prove that the business is innovative.
Step 5: Mention whether tax benefits are required
Generally, start-ups are exempted from income tax for at least 3 years. But to avail of this benefit, it must be certified by the Inter-Ministerial Board (IMB). Start-ups which are recognized by DIPP (Government of India) can directly avail IPR related benefits without requiring any further certification from IMB.
Step 6: Self-certification of certain things
You need to certify the following:
- That the proposed start-up is a Private Limited Company or LLP or a Partnership Firm
- That the company or the business is not incorporated or registered before 5 years
- That the company’s turnover is not more than Rs. 100 crore
- That the company will keep innovating something new or will make the existing system in a much better way
- That the idea of the business is fresh and is not in contravention to any existing business
Step 7: Receive Recognition Number
Now we come to the final step where on the application of this registration, you will receive a recognition number with immediate effect. Also, you will get a certificate of incorporation after the department verifies all the uploaded documents.
Note: In case the required document is wrongly uploaded or a forged document has been uploaded, then you shall be liable to a fine of 50% of your paid-up capital of the start-up with a minimum fine of Rs. 25,000.
Now that you know the eligibility and registration criteria for a start-up, enrol your company into the Start-up India scheme and get all the benefits provided by the government. For easy registration, contact Registration SEVA now.
How can we help in getting registration?
Our services include the following:
01. What is Start-up India?
Start-up India is a flagship initiative of the Government of India, intended to build a strong ecosystem that is conducive for the growth of start-up businesses, to drive sustainable economic growth and generate large scale employment opportunities.
02. What qualifies as a “Start-up” for the purpose of Government schemes?
Private Limited Company or Registered Partnership Firm or Limited Liability Partnership shall be considered as a “Start-up”.
03. When an Entity Shall Cease to be a Start-up?
- After the completion of 10 years from the date of incorporation or registration.
- In case the turnover for any previous year surpasses Rs. 100 crore
04. Do I need to print an application form and submit the physical copy of the same to complete the process of Start-up registration?
No. The application has to be submitted online
05. Is PAN mandatory for start-up registration?
No it is not mandatory. However, it is advised that a valid PAN of the entity is provided at the time of registration, as each entity is separately taxable.
06. Could A Foreign Firm Registered in India Entitled for Start-up India Registration?
Yes, provided the corporation incorporated in India and fulfill all specified criteria to become eligible for registration.
07. What Is the Validity of Start-up Recognition Certificate?
Up to 10 years from the date of incorporation/registration or valid until its turnover in any previous year does not exceed Rs. 100 crores, whichever is earlier.
08. Whether The Tax Exemption Is Attached by Default with All Start-up Recognition?
No. According to the current notification dated 11.04.2018, in order to claim Tax benefit or exemption under the income tax act, one is required to apply separately after getting the startup recognized.
0 9. Who Is the Authority for Issuing Start-up Recognition Certificate?
Start-up Recognition Certificate is issued by the Ministry of Commerce and Industry (Department for Promotion of Industry and Internal Trade).
10. Whether all recognized Start-ups are exempted from Angel Tax?
No. Recognized start-ups those who are eligible can make an application for exemption from Angel Tax. Only after approval of the application, the start-ups are eligible for Angel Tax exemption.