Startup India is a flagship initiative by the Government of India. This initiative is taken to support innovations and startups in India. A startup is a small business started with the objective to solve a problem. These are the companies which are generally operated by the founders or a single person. These companies are generally offering those services which the founders think are not available or are available in an inferior quality. Startups provide jobs opportunities to the people which helps in the economic development of the society.
Benefits Available:
- 100% Tax exemption for 3 consecutive years of entity’s choice in the first 7 years from Date of Incorporation under section 80IAC of the Income Tax Act, 1961.
- Fast Track mechanism for Patent Applications –80% rebate of the applicable fees
- Funding provided by the Government of India
- Exemption from Capital Gain Taxation
- No inspections in respect of Labour Laws for a period of 3 years (not applicable in case any complaints of violation)
Eligibility and Recognition:
- Recognition is provided to a Startup for 7 years from the date of its incorporation
- Eligibility Criteria for claiming Tax Exemption:
- Business incorporated in between 1st April 2016 and 1st April 2021
- Must be a Private Limited Company or Limited Liability Partnership
- Must be engaged in a business engaged in Innovation, Development or Improvement of products or services or scalable business model with a high potential of employment generation or wealth creation
- Annual Turnover of the business does not exceed Rupees 25 Crores
- The entity holds a Certificate of Eligible Business from the Inter-Ministerial Board of certification
Conditions:
- The business is not formed by splitting up / reconstruction of a business already in existence.
- The Business is not formed by the transfer to a new business of Machinery or plant previously used for any purpose
Procedure:
- Incorporation of a Private Limited company or LLP
- Registration of the business with Startup India Scheme with email ID or Company CIN
- Registration with DPIIT
- Getting Recognition Number
Requirements for Registration:
- Incorporation Certificate
- Recommendation Letter from any of the following:
- Brief Description of your Business and Product
- Self Certification with Labour and Environmental Laws (ESI, PF, Gratuity, Contract, etc)
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a. Any patent filed and published in patent journals available online or offline
b. Incubators who are established in post graduation colleges in India
c. Support letter from one of the startups who is funded through central or state Government authorities or any incubator which is duly recognized by the government of India
d. Letter of funding which should not be less than 20% in equity by angel or incubation fund
Summary:
| Benefits | Conditions | Requirements |
| 100% tax exemption for 3 consecutive years | Must be Pvt Ltd or LLP | Incorporation Certificate |
| Funding provided to eligible business | Start up must be Innovative and Problem Solving | Recommendation Letter |
| Easy set up with Labour and Environmental Laws | Must have high potential for Employment creation / wealth generation | Description of your Business &Product / Service |
| Exemption from Capital Gain | Business Model must be working | Self Certification |
| Simplified Income Tax Assessment proceeding | Business must not be result of split up / reconstruction | |
| 80% rebate for Patent Registration | Plant / Machinery used for the business must not be previously used |