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A startup is a newly established business, usually small, started by 1 or a group of individuals. What differentiates it from other new businesses is that a startup offers a new product or service that is not being given elsewhere in the same way. The keyword is innovation. The business either develops a new product/ service or redevelops a current product/service into something better.
Startups are becoming very popular in India. In order to develop the Indian economy and attract talented entrepreneurs, the Government of India, under the leadership of PM Narendra Modi, has started and promoted the Startup India initiative to recognize and promote startups.
You must first incorporate your business as a Private Limited Company or a Partnership firm or a Limited Liability Partnership. You have to follow all the normal procedures for registration of any business like submitting the registration application and obtaining the Certificate of Incorporation/Partnership registration.
You can incorporate a Private Limited Company or a Limited Liability Partnership (LLP) by filing the registration application to the Registrar of Companies (ROC) of your region. You can establish a Partnership Firm by filing the application for registration of your firm with the Registrar of Firms of your area. You need to submit the required documents and fees to the Registrar of Companies or Registrar of Firms along with the registration application.
Then the business must be registered as a startup. The entire process is simple and online. Visit the Startup India website and click on the ‘Register’ button as shown below.
Enter your name, email ID, mobile number, password and click on the ‘Register’ button.
Next, enter the OTP which is sent to your email and other details like, the type of user, name and stage of the startup, etc and click on the ‘Submit’ button. After entering these details, the Startup India profile is created.
Once, your profile is created on the website, startups can apply for various acceleration, incubator/mentorship programmes and other challenges on the website along with getting access to resources like Learning and Development Program, Government Schemes, State Polices for Startups and pro-bono services.
The next step after creating the profile on the Startup India Website is to avail the Department for Promotion of Industry and Internal Trade (DPIIT) Recognition. This recognition helps the startups to avail benefits like access to high-quality intellectual property services and resources, relaxation in public procurement norms, self-certification under labour and environment laws, easy winding of company, access to Fund of Funds, tax exemption for 3 consecutive years and tax exemption on investment above fair market value.
For getting DPIIT Recognition, log in with your registered profile (account) credentials on the Startup India website and click on the ‘DPIIT Recognition for Startups’ button under the ‘Schemes and Policies’ tab.
Click on the ‘Get Regonised’ button on the next page. A new page will open. Scroll down this page and click on the ‘Click here for submitting your application for recognition as a Startup’ button.
The ‘Startup Recognition Form’ page opens as shown below.
On the ‘Startup Recognition Form’, you need to fill the details such as the entity details, full address (office), authorised representative details, directors/partner details, information required, startup activities and self-certification. Click on the plus sign on the right-hand side of the form and enter each section of the form.
After entering all the sections of the ‘Startup Recognition Form’, accept the terms and conditions and click on the ‘Submit’ button.
That’s it! On applying you will get a recognition number for your startup. The certificate of recognition will be issued after the examination of all your documents which is usually done within 2 days after submitting the details online.
However, be careful while uploading the documents. If on subsequent verification, it is found to be obtained that the required document is not uploaded/wrong document uploaded or a forged document has been uploaded then you shall be liable to a fine of 50% of your paid-up capital of the startup with a minimum fine of Rs. 25,000.
Patents, trademarks and/or design registration: If you need a patent for your innovation or a trademark for your business, you can easily approach any from the list of facilitators issued by the government. You will need to bear only the statutory fees thus getting an 80% reduction in fees.
Funding: One of the key challenges faced by many startups has been accessing finance. Due to lack of experience, security or existing cash flows, entrepreneurs fail to attract investors. Besides, the high-risk nature of startups, as a significant percentage fail to take off, puts off many investors.
In order to provide funding support, the Government has set up a fund with an initial corpus of INR 2,500 crore and a total corpus of INR 10,000 crore over a period of 4 years (i.e. INR 2,500 crore per year). The Fund is in the nature of Fund of Funds, which means that it will not invest directly into Startups, but shall participate in the capital of SEBI registered Venture Funds.
Self Certification Under Employment and Labour Laws: Startups can self certify under labour laws and environment laws so that their compliance costs are reduced. Self-certification is provided to reduce regulatory burden thereby allowing them to focus on their core business. Startups are allowed to self-certify their compliances under six labour laws and three environment laws for a period of 3 to 5 years from the date of incorporation.
Units operating under 36 white category industries as published on the website of the Central Pollution Control Board do not require clearance under 3 environment-related Acts for 3 years.
Tax Exemption: Startups are exempted from income tax for 3 years. But to avail these benefits, they must be certified by the Inter-Ministerial Board (IMB). The Startups incorporated on or after 1st April 2016 can apply for the income tax exemption.
Startup India has changed the procedure of registration since its inception. It has exempted most of the previous requirements now. Many documents which were required to be filed previously are waived off. The list of documents that are not required to be filed at the time of the registration are-
It’s very easy to register as a startup thanks to the various government initiatives. However, you can focus on your key area while we at ClearTax help you from start to finish right from incorporating your company to getting your startup recognition. Do visit our website to know more about startup services.
An entity incorporated as a Private Limited Company, Partnership Firm or a Limited Liability Partnership can register themselves under the startup India scheme. The annual turnover of these business entities should not exceed Rs.100 crores, and they should have been in existence for up to ten years from the date of its incorporation/ registration. Such an entity should be working towards innovation, development or improvement of products or services or processes.
There are a number of benefits startups receive under the Startup India Initiative. Nevertheless, in order to avail of these benefits, an entity is needed to be recognised by the DPIIT as a startup.
Startups are allowed to self certify their compliance with six labour laws and three environment laws. This is allowed for a total period of five years from the date of incorporation/registration of the entity. Startups are allowed a three-year tax exemption and the best intellectual property services and resources solely built to help startups protect and commercialise their IPRs.
The most preferred business structures for a startup are Private Limited companies and LLPs. A Private Limited company is legally recognized and generally favoured by investors. However, it has stricter compliance and may have a higher cost of incorporation.
Whereas incorporation cost is lower for LLPs and they tend to have relaxed compliance in comparison to the Private Limited Companies. In addition to that, LLPs have limited liabilities and are equally recognised by investors and all over the world.
To attract investors, not only do you need a stellar product with a scalable model, but you also need visibility. Make sure that your product receives healthy engagement and traction. You’ll need to register your startup on startup India and proactively seek out investors. Make sure you are able to effectively communicate your business idea to the investor and the sustainability of your business model.
Any entity that has at least one registered office in India can register itself on the hub, since the location preferences, for the time being, are only created for Indian states. However, soon the government hopes to start registrations for stakeholders from the global ecosystem too.
Startup incubators are typically institutions that help entrepreneurs by developing their business, especially in the initial stages. The incubation function is usually carried out by institutions that have experience in the business and the tech world.
Startup accelerators support early-stage, growth-driven companies. These programmes usually have a timeframe in which individual companies spend anywhere between a few weeks and a few months working with a group of mentors who are educated and may also provide financial help.
Any business entity that has completed 10 years from the date of its incorporation/registration, and has exceeded the previous years turnover of Rs.100 crores shall stop being a startup on completion of 10 years from the date of its registration/incorporation.
Yes, as per the law an existing entity can register itself as a startup, provided that it meets the prescribed criteria for a startup. They will also be able to avail various tax and IPR benefits that are available to startups. The criteria are the same as those mentioned in the article above.
Once the application is complete, and the startup gets recognised, you will receive a system-generated certificate of recognition. You will be able to download this certificate from the Startup India portal.
Yes. To get register a startup with the Startup India website and get startup benefits, it needs to have at least one registered office in India, since the location preferences, for the time being, are only created for Indian states. However, soon the government hopes to start registrations for stakeholders from the global ecosystem too.
Please note that the password you enter for registering on the startup portal must contain 8 to 15 characters, out of which it must contain at least one lowercase letter, one uppercase letter, one numeric digit, and one special character. The portal will accept only a password that contains all these requirements.
A startup is registered with an objective to solve a problem. For a startup to be registered with the Startup India initiative, it must be working towards innovating something new or improving the existing technology to solve a problem. Thus, in the ‘Startup Activities’ section on the ‘Startup Recognition Form’, you must write the details on what problem is your the startup solving, what does your startup propose to solve the problem, i.e. the solution, the uniqueness of your solution, i.e. innovative nature of your product or service and what is the revenue-generating model of your startup.
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