Startup India Scheme is an initiative by the Government of India that offers financing and handholding support to Startup entities for growth and expansion. Additional key functions include the promotion of Startups, wealth creation, and employment generation.
Startup is known to be a newly formed company, usually small which is started by one or more individuals. The primary purpose of a Startup is to grow rapidly and offer something to fulfill the market gap in any sector or industry. There are no fixed parameters set for a Startup, as they are independent to a certain level. Startups initiate with a product concept and strive to grow at pace. It is not necessary that all Startups make a profit in the initial stages. For example, Facebook had to wait for four long years to be profitable.
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6 Steps for Startup India Registration
Step 1: Establishing the business
The applicant needs to incorporate his/her business as a Limited Liability Partnership, Private Limited Company or Partnership firm. The applicant further needs to follow the basic tasks for registration that include obtaining the company’s PAN, Certificate of Incorporation, or Certificate of partnership registration.
Step 2: Registering with Startup India
To register as a Startup, the applicant needs to visit the official website of Startup India and fill in the application form online followed by all the required business details and finally uploading certain documents.
Step 3: Uploading of Documents (PDF format only)
a) Letter of Recommendation/Support
- Letter of recommendation issued by an incubator from a post-graduate college in India and in the format suggested by the Department of Industrial Policy and Promotion (DIPP), or
- Letter of support from an incubator funded by the Government of India, or
- Letter of recommendation from an incubator recognized by the Government of India, or
- Letter of funding by the Government of India or State Government
b) Incorporation/Registration Certificate
- Applicant needs to upload the certificate of their LLP or company and in case of a partnership, a registration certificate is required.
c) Business description in brief
- Applicant needs to provide a description of the nature of his/her business.
Step 4: Avail Tax Benefits
For the first 3 years, Startups are exempted from Income Tax. However, to avail such benefits, Startups must be certified by Inter-Ministerial Board (IMB). Those startups that are recognized by DIPP and the Government of India can avail IPR benefits without taking any additional certificate from IMB.
Step 5: Following conditions need to be Self-certified for registering as a Startup Enterprise:
- Register the company as a Private Limited Company, Partnership firm, or a Limited Liability Partnership
- Business incorporation in India should not be older than 5 years
- Company turnover should be less than Rs. 25 crore
- The business should not have split and reconstructed in any scenario
Step 6: Finally, get the recognition number
Once the applicant has self-certified the above-mentioned conditions and all the documents are verified by the concerned authority, a certificate of recognition will be issued. Applicant must ensure that all the authentic and valid documents shall be uploaded. No wrong document should get uploaded as it will result in the applicant paying a fine of 50% of the paid-up capital of the Startup or a minimum fine of Rs. 25,000.
Once the applicant gets the recognition number, he/she can apply for trademarks, patents, and design registration by approaching any of the facilitators issued by the Government of India.
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Eligibility for Companies to get Startup Recognition
- Age Criteria: Applicant must be a minimum of 18 years of age and a maximum of up to 65 years
- To be registered as a private limited company, registered partnership firm, or limited liability partnership
- Annual turnover should be less than Rs. 100 crore
- The establishment should not be made from any split-up or restructuring of any business
- Should not be older than 10 years
- DPIIT recognised Startups that are within 5 years of incorporation shall apply
- Applicant should not have defaulted with any financial institution in past
Document Required for Startup India Registration Certificate
- Duly filled application form with required details, such as email ID and mobile number
- Passport-sized photographs
- Company details that include office address, nature of business, engaged in industry, sector, etc.
- Certificate of Incorporation / Registration Certificate and PAN
- Details of Directors and Partners, such as name, photo ID, Gender, address, etc.
Benefits of Startup India Registration
- Funding by banks under Govt. of India
- Participation in tenders introduced by Govt. or PSUs
- Tax exemption – Under 80IAC and U/s 56 relief for Angel Tax relief (Tax on Share Premium)
- Participation under Govt. schemes and Startup Grand Challenges
- Easy closure, if needed – Under 90 days under insolvency and bankruptcy code 2016
What factors are considered by the Investors to invest in Startups?
Below stated are the key factors that are considered by investors:
- Scalability of a company
- Dependable and efficient team
- Complete business plan along with vision
- Risk-taking capabilities
- Value of goods and services to be sold
- Market size and nature of business
Q. How can an entity avail benefits under various Government schemes, including Startup India Scheme?
Ans. To avail benefits of government schemes, the entity needs to be recognized as a Startup by applying on Startup India Mobile App/portal and obtaining the certificate of recognition.
Q. For how long is Startup Certificate valid?
Ans. The startup certificate is valid for 5 years from the date of incorporation.
Q. Do I need to submit a physical copy of the application?
Ans. No, you just need to apply for the registration online.
Q. How soon I can get the certificate of recognition?
Ans. You can get the certificate of recognition instantly by downloading it online from the official website after form submission.
Q. If my entity does not have a PAN card, can I still register as a Startup?
Ans. Yes, your entity can be registered as a Startup, if you do not have your entity’s PAN.
Q. For existing entities, what is the tenure for getting the certification of IMB for availing tax benefits?
Ans. The application process for getting a certificate from IMB completes within 10-25 working days.
Q. How much does it cost to register a Startup in India?
Ans. The registration fee for a startup shall depend on the type of company registration and shall vary from person to person.
Q. What is a Letter of support in Startup-India Registration?
Ans. A letter of support is a recommendation letter from the angel investors or incubators in which they declare to help the startup by providing funding or a loan.
Q. Do I need to print an application form and submit the physical copy of the same to complete the process of Startup registration?
Ans. No, the application process is performed online only, so you need to fill in and submit the application form online.
Q. Can a foreign company register under Startup India?
Ans. Yes, a foreign national can enter into a partnership under the LLP Act and register under Startup India.
Q. Would a One Person Company (OPC) be eligible to avail benefits under the Startup India initiative?
Ans. Yes, One Person Company is eligible to avail benefits under the Startup India Scheme.