The objective of this note is to summarise the benefits of the Startup India Scheme
What is the scheme about – Startup India Scheme is an initiative of Government of India first announced in the year 2015. The objective of launching this scheme is to Simplify the procedural aspects relating to licensing and compliance and to enable the promotors to concentrate on the core business requirements. The Scheme not only provides relaxation with respect to compliance, but also provides Tax Exemptions, easy access to Banking Facilities, a number of Pro Bono Services which includes Accounting Software, Financial Services, Marketing Services, etc.
The Scheme aims at providing easy access to various resources required to kick start the Business. To avail the benefits of the scheme, the eligible organisation has to register with DPIIT to obtain the recognition and access the host of benefits provided by the scheme.
Eligible Organisation –
- Incorporation – the company should not be in existence for more than 10 years from the date of incorporation
- Type of Entity – Private Limited Company, Registered Partnership Firm or LLP
- Turnover – Should not have exceeded INR 100 crores in any year since its existence
- Demerged or Restructured Entity – The entity/company should be a new entity and not a demerged part of an existing entity.
- Potential for Wealth Creation & Employment – The Business idea should be Innovative and Progressive capable of creating Wealth and Employment.
What are the benefits –
- Self-Certification for Labour Laws & Environment Laws: (Eligible Start-up – within 5 years of incorporation)
The recognised Start-ups are allowed to self-certify compliance of 6 Labour Laws and 3 Environmental Laws through simple online procedure. No inspection till 5 years except on receipt of compliant of violation of law.
- Patent & IPR Application:
- The Start-up registered with DPIIT can avail following benefits:
- Fast-tracking of Start-up Patent Applications
- Panel of facilitators to assist in filing of IP applications
- Govt to bear facilitation cost, Start-ups to bear only the statutory cost
- 80% rebate in filing of application
- Tax Exemption Under Section 80IAC: (Eligible Start-up: Private Limited Co. or LLP incorporated after 1st April 2016 and before 1st April 2021)
Exemption from payment of income tax for 3 consecutive financial years out of first 10 financial years, subject to certain terms and conditions. Click here to refer Section 80IAC. An application has to be made in the prescribed form along with specified documents to claim the said exemption.
- Exemption Under Section 56(2)(VIIB) of Income tax Act:
- Exemption from Tax on Issue of shares at a price higher than its fair market value. Section 56(2)(VIIB) brings such transactions of a Private Limited Company under the tax net subject to certain terms and conditions.
- Investments into eligible start-ups by listed companies with a net worth of more than INR 100 Crore or turnover more than INR 250 Crore shall be exempt
- Investments into eligible Start-ups by Accredited Investors, Non-Residents, AIFs (Category I), & listed companies with a net worth more than 100 crores or turnover more than INR 250 Crore, shall be exempt
- Consideration of shares received by eligible start-ups shall be exempt up to an aggregate limit of INR 25 Crore
- Easy Winding up of the Company:
The aim of this benefit is to ensure that the resources are reallocated to a more profitable venture
Insolvency and Bankruptcy Code, 2016, provides for winding up of a company within 90 days of filing the application for insolvency on meeting the specified criteria.
- Easier Public Procurement Norms:
- Opportunity to list the products of the Start-ups on Govt Marketplace which is used by Govt departments to procure products and services.
- Exemption from Prior Experience/Turnover on demonstrating requisite capabilities to fulfil the order.
- Exemption from EMD while filing for Govt tenders.
How to Register:
Begin with creating an account on the Startup India website and follow the instructions. Click here to create an account.
Click here to refer the scheme in detail.
Resources provided by the Scheme includes the following:
|Learning and Development||Provides a 4-week free course to guide the budding entrepreneurs. The website hosts a variety of courses, including 3500+ paid courses from Udemy that are made available on the portal for free.|
|Government Schemes||Over 100 schemes which can be filtered by relevant departments and ministries for easy access.|
|Start-up Policies||A list of 29 State Government policies that offer benefits to start-ups|
|Pro-Bono Services||Collaboration with leading corporates and start-ups like Zoho, RBL, Truecaller, etc. offering free products and services for a specified period.|
|Knowledge Bank||A quick walkthrough on all things startup, including company registration, investor engagement, legal considerations, etc.|
|Tools and Templates||A repository of sample templates for all legal & HR documents, investor decks, deeds, contracts, etc|
|Networking||Connect with people from the startup ecosystem on the portal|
|Idea Bank||Brainstorm innovative ideas for the listed problem statements on the website|
|Programs & Initiatives||Apply for acceleration, mentorship programs, and other challenges across the globe|
Click here to access the abovementioned resources.