Startup India
INTRODUCTION
“Startup India” is an initiative placed by the Hon’ble Prime Minister of India, Shri Narendra Modi on the 15th day of August, 2015, on behalf of the Government of India. The essential factor needed for a startup is ‘innovation’ in a product or service or a better redevelopment of an existing product/service.
An entity will be treated as a Startup if it is incorporated as a Private Limited Company or is registered as a Partnership Firm or Limited Liability Partnership in India.
DEFINITION OF STARTUP (for the purpose of Government schemes only)
A startup means an entity:
- Incorporated or registered in India not earlier than 10 years.
- Annual turnover should not exceed INR 100 Crores in any preceding financial year.
- To work towards the innovation, development, deployment or restructuring of new products, processes or services driven by technology or intellectual property.
The entity shall cease to be a startup if:
- It is form by the split or reconstruction of an already existing business.
- Its turnover has exceeded INR 100 Crores in the previous financial years.
- It has completed ten years from the date of incorporation /registration.
NEED OF STARTUP INDIA
Startup India is all about creating prosperity in India. This Concept was kicked off with an auspicious intent to lend helping hands by the Government of India to those who have started their business with a different prospective and laying innovative ideas in different fields of business, but unable to sustain long because of the lacking resources around them. As a result, their ideas did not materialize, talents and potential remained untapped, and the country got deprived of wealth creation, economic growth and employment generation at large.
Startup India, an initiative which will largely help to promote entrepreneurship and economic growth by ensuring that people who possess potential and innovative ideas can start their own businesses with the encouragement with active support of the Government of India at multiple levels.
This initiative is focusing on three areas:
- Simplification and Handholding
- Financing Support and Incentives
- Industry –Academia Partnership and Incubation
STARTUP INDIA’S 19 POINT ACTION PLAN
- Self-Certification Compliance
- Single point of contact through Startup India Hub
- Simplify procedures with mobile app and portal (for registration, filling compliance and obtaining information)
- Legal support, Fast Tracking and 80% reduction in patent registration
- Relaxation in norms of public procurement
- Easier and Faster Exit
- Funding support via a fund of fund corpus of INR 10000 Crores
- Credit Guarantee Funding
- Tax Exemption on Capital Gains
- Income tax exemption of 3 years
- Tax exemption on Investment above fair Market Value (FMV)
- Annual Startup Fests (National and International)
- Launch of world class innovation hubs under Atal Innovation Mission (AIM)
- Set up country wise incubator network
- Innovation Centers to augment incubation and R&D
- Research parks to propel innovation
- Promote entrepreneurship in biotechnology
- Innovation focused programs for students
- Annual Incubator grand challenge
STEPS FOR STARTUP REGISTRATION IN INDIA
- Incorporate your Business:
First and foremost, beneficiary is needed to incorporate a business entity being a Company or Partnership Firm or Limited Liability Partnership.
- Registered with startup India
Then the business must be registered as a startup through the Startup India website www.startupindia.gov.in with all the details and credentials.
- Get DPIIT Recognition
Startups can apply to get recognized by Department for Promotion of Industry and Internal Trade to avail numerous benefits.
After creating the profile on startup India website it to avail Department for Promotion of Industry and Internal Trade (DPIIT) Recognition.
- Recognition Application
The ‘Recognition Application Detail’ page opens. On this page click on ‘View Details’ under the registration details section. Fill up ‘Startup Recognition Form’ click on ‘Submit’
- Document for registration
- Incorporation /Registration Certificate
- Director Details
- Patent and trademark details (optional)
- PAN
- Authorization letter
- A proof of concept (website link/video) for startup in validation stage
Documents which have been waived off
- Letter of recommendation
- Sanction letters
- Udyog Aadhar
- MSME Certificate
- GST Certificate
- Recognition number
You will immediately get a Recognition Number for your startup, and certificate of recognition will be issue after examination of all documents which is usually done in 2 days after submitting details online.
BENEFITS OF DPIIT RECOGNIZED STARTUPS:
- Intellectual Property Rights (IPR) Benefits
- Relaxation in public procurements norms
- Self certification under Labour and Environment laws
- Fund of fun for startups (FFS)
- Faster exit for startups
- Seed fund scheme
DPIIT RECOGNIZED STARTUPS MAY APPLY TO INTER-MINISTERIAL BOARD (IMB) FOR THE FOLLOWING BENEFITS
- Section 80IAC: Income Tax exemption for 3 out of 10 years
- Section 54 GB: Capital Gain on transfer of residential property
- Section 79: Carry forward and set off of losses
- Section 156, 191 and 192: Deferment of tax Liability on ESOPs
STARTUP FUNDING STAGE AND SOURCES
- Working on ideas: Fund Sources are Family, Friends, Grant, and Collateral Free Debt
- Product/ service launched at market: Fund sources are Angel Investors, Collateral Free Debt
- Product /service gaining market traction: Fund Sources are Venture fund, Bank Loan
- New consumers and rapidly increasing revenues: Fund sources are Private Equity firms, Investment firms, Venture funds
- Establish customer base and stable revenues: Fund sources are Stock Market, Acquisition by Large corporations.
Author: Ajay Kacher – a Legal Associate at IP & Legal Filings, in case of any queries please contact/write back to us at support@ipandlegalfilings.com.
