Startups are booming in India. The government is also supporting young entrepreneurs to establish startups. Startups help to boost the country's economy. A startup is a business that offers innovative products or services that provide solutions to a problem existing in society. A startup may also redevelop a current product or service into something better.
The Government of India, under the leadership of PM Narendra Modi, has started and promoted the Startup India initiative to develop the Indian economy, recognise and promote startups and attract talented entrepreneurs.
With a view to boost the Indian economy and encourage entrepreneurship, the Government of India, under the administration of the Ministry of Commerce & Industry, had begun the Start-up India Stand-up India initiative in 2015 to uplift and grow the Indian start-ups.
The Startup should be a
The company should be newly incorporated and should not be formed by splitting up or reconstruction of an existing business.
Turnover should be less than INR 100 Crores in any of the previous financial years.
An entity shall be considered as a startup up to 10 years from the date of its incorporation
The business concept should be unique driving towards innovation or bringing improvement of existing products, services and processes and
A startup should have the potential to generate employment/ create wealth.
On receipt of an application, DPIIT issues a Startup India certificate to the newly incorporated company after validating the unique business process and other eligibility criteria.
An investment made on startup by investors on the premium is exempt from tax u/s 56(2)(viib) of the Income Tax Act if a startup is further approved by the Inter-Ministerial Board.
This exemption is valid till startup paid-up share capital + share premium does not exceed INR 25 crore.
For availing angel tax exemption, a startup needs to file a declaration under Form-2 to DIPP.
The startup will get any 3 consecutive years tax holiday out of ten years tenure. For income tax exemption u/s 80-IAC, Startup needs to file a separate application under Form-1 and the Income Tax authority shall grant the certificate or reject the application. This application can be filed only after the issuance of a Startup India Certificate.
An entity shall cease to be a Startup on completion of ten [10] years from the date of its incorporation/ registration.
If its turnover for any previous year exceeds one hundred [100] crore rupees. Whichever is earlier.
Once applied for the startup india registration, you will receive an acknowledgment receipt number (ARN) for tracking your certificate status.
Once your Startup India application is successfully processed, you can easily download your Start-up India certificate.
Post getting recognition under startup India scheme, you may apply for Tax exemption u/s 80 IAC of the Income Tax Act.
A Startup can avail tax holiday for 3 successive financial years during its first 10 years of startup eligibility.
Criteria for applying to 80IAC Tax exemption:
After startup india registration, you may apply for Angel Tax Exemption.
Criteria for Angel Tax Exemption u/s 56 of the Income Tax Act 1961:
Startups can do self assessment for labour law compliances and there will be no inspection or physical visit by public officers during the first 3 years. Startups can self-certify through startup india portal with given below 6 labour laws.
On obtaining startup India certificate, the startups can avail various assistance in applying for intellectual property rights e.g. Trademark registration, patent and copyright registration.
Startups registered under Startup India scheme can avail funding under various government or semi government aided schemes such as.
Under this scheme, interest free loan is provided by Small Farmers’ Agribusiness Consortium (SFAC) to projects falling short of capital requirement for project completion.
Stand Up India Scheme bank loan from 10 lakh-1 crore to at least 1 SC/ST borrower and at least one women enterprise per bank branch.
NSIC registers MSEs under SPRS scheme for participation in Government Purchases.
| Features | Proprietorship | Partnership | LLP | Company |
|---|---|---|---|---|
| Definition | Unregistered type of business entity managed by one single person | A formal agreement between two or more parties to manage and operate a business | A Limited Liability Partnership is a hybrid pisah combination having features similar to a partnership firm and habilites similar to a company | Registered type of entity with limited lability to the owners and shareholders |
| Ownership | Sole Ownership |
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Designated Partners |
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| Registration Time | 7-9 working days |
| Promoter Liability | Unlimited Liability | Limited Liability | |||||||
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| Governance | - | Under Partnership Act | LLP Act, 2008 | Under Companies Act,2013 | |||||
| Transferability | Non Transferable | Transferable if registered under ROF | Transferable | ||||||
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ITR5 |
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