Startup India Scheme

Startup India Scheme: Government Initiative

Criteria

Your company must meet the following criteria to be considered eligible for DPIIT startup recognition.

• Company Age – Period of existence and operations should not be exceeding 10 years from the Date of Incorporation.
• Company Type – Should have been Incorporated as a Private Limited Company or a Registered Partnership Firm or a Limited Liability Partnership.
• Annual Turnover – Should not exceed Rs.100 crore for any of the financial years since its Incorporation.
• Original Entity – Entity should not have been formed by splitting up or reconstructing an already existing business.
• Innovative & Scalable – Should have plan for development or improvement of a product, process or service and/or have a scalable business model with high potential for the creation of wealth & employment.

Self Certification

Objective

To reduce the regulatory burden on Startups, thereby allowing them to focus on their core business and keep compliance costs low.

Benefits

Startups shall be allowed to be self-certify compliance for 6 Labour Laws and 3 Environmental Laws through a simple online procedure.
In the case of labour laws, no inspections will be conducted for a period of 5 years. Startups may be inspected only on receipt of credible and verifiable complaint of violation, filed in writing and approved by at least one level senior to the inspecting officer.
In the case of environment laws, startups which fall under the ‘white category’ (as defined by the Central Pollution Control Board (CPCB)) would be able to self-certify compliance and only random checks would be carried out in such cases
 

Labour Laws:

The Building and Other Constructions Workers’ (Regulation of Employment & Conditions of Service) Act, 1996
The Inter-State Migrant Workmen (Regulation of Employment & Conditions of Service) Act, 1979
The Payment of Gratuity Act, 1972
The Contract Labour (Regulation and  Abolition) Act, 1970
The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952   
The Employees’ State Insurance Act, 1948
 
Environment Laws:

 The Water (Prevention & Control of Pollution) Act, 1974
The Water (Prevention & Control of Pollution) Cess (Amendment) Act, 2003
The Air (Prevention & Control of Pollution) Act, 1981

Eligibility

DPIIT recognised startups that are within 5 years of incorporation

Registration Process

The startup has to register their company in the portal belong to the Ministry of Labour and Employment “Shram Suvidha Portal”
Register at Shram Suvidha Portal and then login.
After successful login, click link “Is Any of your Establishment a Startup?”
Then the registration can be done by following the instructions

Patent Application and IPR Application

​​​​​​Innovation is the bread and butter of startups. Since patents are a way of protecting innovative new ideas that give your company a competitive edge, patenting your product or process can dramatically increase its value and the value of your company.

However, filing a patent has historically been an expensive and time consuming process which can be out of the reach of many startups.

The objective is to reduce the cost and time taken for a startup to acquire a patent, making it financially viable for them to protect their innovations and encouraging them to innovate further.

• ​Fast-tracking of Startup Patent Applications – The applications will be fast-tracked so that the value can be realised sooner.
• Panel of facilitators to assist in the filing of IP applications – The facilitators will be assisting in the filing of applications.
• Government to bear facilitation cost – Under this scheme, the Central Government shall bear the entire fees of the facilitators for any number of patents, trademarks or designs that a Startup may file, and the Startups shall bear the cost of only the statutory fees payable.
• Rebate on the filing of application – Startups shall be provided with an 80% rebate in filing of patents vis-a-vis other companies. This will help them pare costs in the crucial formative years

Tax Exemption under 80IAC

Eligibility:

• The entity should be a DPIIT recognised startup
• Only Private Limited Companies or Limited Liability Partnerships are eligible for tax exemption under Section 80IAC
• The startup should have been incorporated after 1st April, 2016

Benefits:

Eligible startups can be exempted from paying income tax for 3 consecutive financial years out of their first ten years since incorporation.

Registration Process & Documents:

Registration Process

• Access Startup India portal and register
• After registration, apply for DPIIT recognition
• Access the Section 80 IAC exemption application
• Fill in all details with the below-mentioned documents uploaded and submit the application form

 
Registration Documents

• Memorandum of Association for Pvt. Ltd. / LLP Deed
• Board Resolution (If Any)
• Annual Accounts of the startup for the last three financial years
• Income Tax returns for the last three financial years

Exemption under Section 56(2)(VIIB) of Income Tax Act

• Investments into eligible startups by listed companies with a net worth of more than INR 100 Crore or turnover more than INR 250 Crore shall be exempt under Section 56(2) VIIB of Income Tax Act
• Investments into eligible Startups 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 under Section 56(2)(VIIB) of Income Tax Act
• Consideration of shares received by eligible startups shall be exempt upto an aggregate limit of INR 25 Crore

Eligibility to avail tax exemption under Section 56

• Should be a private limited company
• Should have been recognised as a DPIIT. To get DPIIT recognition, click on “Get Recognised” below.
• Not Investing in specified asset classes
• Startup should not be investing in immovable property, transport vehicles above INR 10 Lakh, Loans and advances, capital contribution to other entities, except in the ordinary course of business
• Registration Process

Registration to be done at the Startup India Portal

• Get DPIIT Recognition
• File the up Section 56 Exemption application form from this link https://www.startupindia.gov.in/content/sih/en/Form-56.html
• You should receive an email for CBDT within 72 hours of submitting the declaration.

Easy Winding up of Company

• To make it easier for Startups to shut down or wind up operations, with the objective of allowing entrepreneurs to reallocate capital and resources to more productive avenues faster.
• To encourage entrepreneurs to experiment with new and innovative ideas, without having to face complex and long-drawn exit processes where their capital becomes interminably stuck in the event of business failure.
• As per the Insolvency and Bankruptcy Code, 2016, startups with simple debt structures, it can be wound up in 90 days of filing the application for insolvency.
• An insolvency professional can be appointed for the Startup who can be in charge of the company including liquidation of its assets and paying its creditors within six months of such appointment.
• It is responsibility of the insolvency professional to the closure of the business, sale of assets and repayment of creditors in accordance with the distribution waterfall set out in the IBC.