Start – Up India Recognition

Startup India

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.

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What is the Startup India Certificate of Recognition?

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 Startup India Stand-up India initiative in 2015 to uplift and grow Indian start-ups.

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Who is not Eligible for Startup India Recognition?

Sole Proprietorship

Firm constituted by the notary partnership deed

Once annual turnover exceeds INR 100 crores

Company older than 10 years

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Eligibility Criteria for Startup India Certificate

The Startup should be:

Private Limited Company

Registered Partnership Firm

Limited Liability Partnership

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 incorporation.

The business concept should be unique and innovation-driven or improve existing products, services and processes.

A startup should have the potential to generate employment and create wealth.

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3 Layers of Startup India Certificate Recognition

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1. Issuance of Startup India Certificate

DPIIT issues a Startup India certificate to the newly incorporated company after validating the unique business process and eligibility criteria.

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2. Angel Tax Exemption on Equity Investment

Investment made in a startup by investors on premium is exempt from tax under section 56(2)(viib) of the Income Tax Act if approved by the Inter-Ministerial Board.

This exemption is valid till startup paid-up share capital plus share premium does not exceed INR 25 crore.

For availing angel tax exemption, a startup needs to file Form-2 to DIPP.

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3. Income Tax Exemption

A startup can get tax holiday for any 3 consecutive years out of the first 10 years.

For exemption under section 80-IAC, Startup needs to file Form-1 separately.

This application can only be filed after obtaining the Startup India Certificate.

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Validity of Startup India Certificate

An entity shall cease to be a Startup:

On completion of 10 years from incorporation/registration

OR

If turnover exceeds INR 100 crore in any financial year

Whichever is earlier.

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Startup India Certificate Verification

Once applied for Startup India registration, an Acknowledgement Receipt Number (ARN) is generated for tracking the application status.

After successful processing, the Startup India certificate can be downloaded easily.

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Startup India Certificate Benefits

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Tax Exemption under Section 80-IAC

After recognition under Startup India scheme, startups may apply for tax exemption under section 80-IAC of the Income Tax Act.

A Startup can avail tax holiday for 3 successive financial years during its first 10 years.

Criteria for 80-IAC Tax Exemption

Must be a recognized Startup

Only Private Limited Company or LLP is eligible

Must be incorporated on or after 1st April 2016

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Angel Tax Exemption under Section 56

After Startup India registration, startups may apply for Angel Tax Exemption.

Criteria for Angel Tax Exemption

Entity must be a DPIIT recognized Startup

Paid-up share capital and share premium after issue of shares must not exceed INR 25 crore

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Self-Compliance for Labour Laws

Startups can self-certify labour law compliances and avoid inspections during the first 3 years.

Startups can self-certify under the following labour laws:

Inter-State Migrant Workmen laws

Gratuity Laws

Provident Fund Laws

Employee State Insurance laws

Other Construction Worker laws

Contract Labour laws

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Trademark, Patent & IPR Related Exemptions

Startups can avail assistance in applying for intellectual property rights such as trademark, patent and copyright registration.

Recognized startups can avail:

Fast-track startup patent applications

80% rebate on patent filing fees

Panel of facilitators for IP assistance

Rebate on trademark filing

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Funding Opportunities & Government Schemes

Startups registered under Startup India can avail funding under various schemes.

Venture Capital Assistance Scheme

Interest-free loan is provided by SFAC for projects lacking capital requirement.

Support to MSMEs for International Patent Protection

MSMEs in Electronics and IT can avail support for international patent protection.

Stand Up India Scheme

Bank loans from INR 10 lakh to INR 1 crore are provided to SC/ST borrowers and women entrepreneurs.

Single Point Registration Scheme (SPRS)

NSIC registers MSEs under SPRS for participation in Government purchases.

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Documents Required for Startup India Certificate

Business Registration Proof or Certificate of Incorporation

Registered Partnership Deed (if applicable)

Brief description of innovative business idea

Core team details including qualifications and roles

Funding details, if any

Details of IPR applied, if any

Number of employees including founders and their roles