With an objective to reduce the fiscal burden on startup companies and enable them to maximise profits while keeping compliance expenses down, the government of India has launched an initiative called Startup India. This plan was introduced to assist entrepreneurs to grow their businesses.

What is Startup India Scheme?

The Startup India scheme, which was launched on January 16, 2016, has pushed out several programmes with the aim of encouraging entrepreneurs, establishing a rigorous entrepreneurial ecosystem, and morphing India into a hub of job creators. These projects are overseen by the Department of Industrial Policy and Promotion (DPIIT). This plan focuses on strengthening startups not only from major cities but also on empowering individuals from small towns who want to be business owners.

Benefits of Startup India Scheme

The Startup India scheme offers a range of benefits to start-ups. However, in order to obtain these benefits, a company must be recognised as a start-up by the Department of Industrial Policy and Promotion (DPIIT). Following are the Startup India benefits:

Rebate on Patent Cost: In India, the majority of startups are patent-based which means they provide unique goods or services. While registering with any private firm, they are required to pay a high fee, also known as a patent cost to register their companies. But under this initiative, the government provides an 80% reimbursement on patent costs.

Tax Exemption: For the first three years after incorporation, eligible startups are exempted from paying income tax. However, to receive this benefit, the company must be recognised by DPIIT.

Simple Registration Process: The Startup India registration process is easy and hassle-free. Everything takes place in one meeting. Moreover, dedicated officials are eager to assist you at every step.

Government Contracts: Because of the high payouts and big projects, everyone wants to get their hands on government contracts. However, obtaining government tenders is not easy. Under this scheme, startups are given precedence in government tenders.

Self-Certification: This scheme gives eligibility to startups to self-certify compliance with six employment laws and three environmental legislation. There will be no examinations for employment legislation for five years.

Networking Possibilities: By hosting two start-up carnivals each year, the plan enables entrepreneurs to meet a wide range of stakeholders from around the world. This aids in the development of a large global network that can be beneficial to the company.

Apart from the above-mentioned benefits, you will also get other advantages like efficient adherence, a smoother exit procedure for flawed startups, legal assistance, patent application tracking, and a website to curb the spread of unverified information under the Startup India programme.

Eligibility for Startup Registration

Registration as a start-up is only allowed for the below-listed types of businesses:

  • Partnership Organizations

  • Limited Liability Partnership Enterprises

  • Private Limited Companies

Following are the eligibility criteria to get your company registered under this scheme:

  • The business should have received approval from the Department of Industrial Policy and Promotion (DPIIT)

  • The company should not be older than five years

  • The annual turnover should not exceed the value of Rs. 25 Crores

  • It must have a reference letter from an startup incubator

  • It must deliver unique products and services

  • It should encourage employment generation

  • It should not be the outcome of the dissolution of an existing business

Startup India Registration Process

The Startup India registration fee with professional utilities is Rs. 7,499, and the whole process takes approximately 15-20 working days to get completed.

Here are the steps to follow for registration:

  • Browse the official website of Startup India - click this link

  • Create an account and log in to the Startup India page.

  • Fill in the application form.

  • Next, provide your company details like name, registration details, category, etc.

  • Enter accredited representative, director and partner information.

  • After that, upload the supporting documents and self-certification and submit it.

  • Following your submission, DPIIT will do the verification of the provided details.

DPIIT will approve your application if everything is in order.

Documents Required

Following are the required documents for the registration:

  • Certificate of incorporation

  • PAN card of the company

  • MSME registration, GST registration, Trademark registration certificates (if available)

  • Company’s website or profile

  • Details of company directors

  • Revenue details

Tax Exemptions under Startup India Program

Companies under Startup India are eligible for the following tax exemptions:

Under Section 80IAC

  • Startups are restricted from paying income tax for the first three fiscal years after incorporation.

  • Private Limited Companies and Limited Liability Partnerships are eligible for tax exemption.

  • The startup firm must have been formed on or after April 1st, 2016.

Under Section 56(2)(VIIB)

Investments in qualified startups by public firms with a net value of more than Rs. 100 Crores or a turnover of more than Rs. 250 Crores are eligible for tax exemption.

Difference Between Stand-Up India and Startup India

Like Startup India, Stand-Up India is also an initiative established by the Indian government to help entrepreneurs. While they are fundamentally similar, they have very different objectives and focus on very different individuals. People usually get confused between these two schemes and end up assuming both are the same.

To eliminate the confusion, let’s understand the differences between them.

Startup India

Stand-Up India

It tends to focus on businesses that meet the definition of a startup and do not have a high turnover.

It focuses on assisting SC, ST, and women entrepreneurs.

It enables startups to obtain more funding sources for their company, permitting them to finance their project while also allowing them to benefit from several tax deductions.

It allows individuals to apply for large loans ranging from Rs. 10 Lakhs to Rs. 1 Crore.

It allows companies less than five years old to apply for registration.

It only permits individuals from the SC, ST caste and women to participate in the scheme.

It covers 80% of the patent cost.

It covers 75% of the project cost.

Loan for Startup India is available for Partnership Organizations, Limited Liability Partnership Enterprises, and Private Limited Companies.

This scheme only provides loans for greenfield projects (i.e., the beneficiary's first foray into the trading/manufacturing services segment).

FAQs on Startup India Scheme

  • ✔️How can I get funding for Startup India?

    To acquire Startup India financing your firm must be registered under DPIIT.

  • ✔️Who are eligible for Startup India?

    Below are the eligibility criteria to register at Startup India:

    • The business should have received approval from the Department of Industrial Policy and Promotion (DPIIT).

    • The company should not be older than five years.

    • The annual turnover should not exceed the value of Rs. 25 Crores.

    • It must have a reference letter from an incubation.

    • It must deliver unique products and services.

    • It should encourage employment generation.

    • It should not be the outcome of the dissolution of an existing business.

  • ✔️Are startups exempted from GST?

    Private Limited Companies and Limited Liability Partnerships are eligible for tax exemption under Section 80IAC.

  • ✔️What type of companies are eligible for Startup scheme?

    Partnership Organizations, Limited Liability Partnership Enterprises, and Private Limited Companies are eligible for Startup India.

  • ✔️How do startups get seed funding in India?

    In India, seed funding for startups is channelled through state/center-recognized incubators.

  • ✔️How can I get a certificate from Startup India?

    You will be granted your Startup India certificate after the verification of your provided details along with the application form.