The Economic Survey of India 2015-16 states that there are more than 19,000 startups in the country; with a total of eight startups belonging in the fabled ‘Unicorn’ club (valued at $1 million and upwards). The government’s ‘Startup India’ program was launched in the year 2016 to ensure that the growing number of such startups in the country have the right resources to grow. If you are a startup; or are thinking of starting up on your own, this initiative can help you immensely in furthering your business.Also, take a look at 11 benefits to startups by Indian Government
Loosely put, a startup is a young venture that is just beginning to develop. Now, any new business could fall into this category. There are, however, stark differences between a startup and a small business.
A startup is primarily designed to grow and develop at a rapid pace. The term Startup goes beyond referring to a venture that is just getting off the ground, and it usually refers to a technology-oriented company with a high growth potential. You could start a small nail salon with the money you have saved, or buy a franchise of a famous bakery if you please; but would that be a startup? No!
The Department of Industrial Policy & Promotion defines a startup as any entity, incorporated or registered in India. An entity is treated as a Startup which:
a. Has not yet completed a period of ten years from the date of incorporation/registration
b. Is a private limited company or registered as a partnership firm or a limited liability partnership
c. Has an annual turnover not exceeding Rs. 100 crore for any of the financial years since incorporation/registration
d. Is working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation
It is important to note that an entity formed by splitting up or reconstruction of an existing business shall not be considered a ‘Startup’. Also, an entity will not be called a startup after:
a. Completion of ten years from the date of its incorporation/registration, or
b. Achieving turnover in any previous year more than Rs. 100 crore
Now, if your venture falls into any of the above categories and can be considered a ‘startup’ then you can avail many privileges under the scheme. The benefits can be described as follows:
Startups will get an 80% rebate on patent costs. This means, that if and when a startup applies for a patent, the government will come to its aid by funding the defence of the patent. The company will thus get a rebate of 80% in the fees. Moreover, the government will also pay the fees of the facilitator and help obtain the patent. Patent registration and protection of Intellectual Property Rights (IPRs) will be faster and the process, simple.
The government launched a mobile app on 1 April 2016 along with a portal to allow companies to register in a day. A single point of contact has been set up for all registration-based queries at the Start-up India hub. In addition, there is a single window clearance for all clearances, approvals, and registrations, which will make the process easier for all.
Income Tax exemption is available for the first three years post registration under the scheme. However, any startup will be eligible to claim these tax benefits only after obtaining a certificate from the Inter-Ministerial Board which has been set up specifically for this purpose. Also, if the money is invested in a fund of funds, the startups can also avail tax benefits on the capital gains.
Now that you know how beneficial this scheme is, you must think twice before passing it by! And what’s more, our experts at ClearTax will be on board to help you understand the nuances of this scheme and register for it in a seamless and hassle-free manner. So, leave the paperwork to us, and get cracking on your code! Your startup dream is calling.
Also take a look at 11 benefits to startups by Indian Government