Startup India is a flagship initiative of Government of India, which was launched on 16th January 2016 with the objective of supporting entrepreneurs, building a robust startup ecosystem and transforming India into a country of job creators instead of job seekers.

It was intended to build a strong eco-system for nurturing innovation and Startups in the country that will drive sustainable economic growth and generate large scale employment opportunities. The Government through this initiative aims to empower Startups to grow through innovation and design.

• The Startup should be incorporated as a private limited company or registered as a partnership firm or a limited liability partnership.
• 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 its incorporation.
• The Startup should be working towards innovation/ improvement of existing products, services and processes and should have the potential to generate employment/ create wealth. An entity formed by splitting up or reconsutrctuon of an existing business shall not be considered a "Startup"

Compliance Regime based on Self-Certification:

To reduce the regulatory burden on Startups thereby allowing them to focus on their core business and keep compliance cost low: Startups shall be allowed to self-certify compliance (through the Startup mobile app) with 9 labour and environment laws. In case of the labour laws, no inspections will be conducted for a period of 3 years. In 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.

Startup India Hub:

To create a single point of contact for the entire Startup ecosystem and enable knowledge exchange and access to funding. The Government of India has taken various measures to improve the ease of doing business and is also building an exciting and enabling environment for these Startups, with the launch of the “Startup India” movement. The “Startup India Hub” will be a key stakeholder in this vibrant ecosystem and will:

• Work in a hub and spoke model and collaborate with Central & State governments, Indian and foreign VCs, angel networks, banks, incubators, legal partners, consultants, universities and R&D institutions.
• Assist Startups through their lifecycle with specific focus on important aspects like obtaining financing, feasibility testing, business structuring advisory, enhancement of marketing skills, technology commercialization and management evaluation.
• Organize mentorship programs in collaboration with government organizations, incubation centers, educational institutions and private organizations who aspire to foster innovation.

To all young Indians who have the courage to enter an environment of risk, the Startup India Hub will be their friend, mentor and guide to hold their hand and walk with them through this journey.

Legal Support and Fast-tracking Patent Examination at Lower Costs:

To promote awareness and adoption of IPRs by Startups and facilitate them in protecting and commercializing the IPRs by providing access to high quality Intellectual Property services and resources, including fast-track examination of patent applications and rebate in fees. The scheme for Startup Intellectual Property Protection (SIPP) shall facilitate filing of Patents, Trademarks and Designs by innovative Startups. Various measures being taken in this regard include:

• Fast-tracking of Startup patent applications: The valuation of any innovation goes up immensely, once it gets the protective cover of a patent. To this end, the patent application of Startups shall be fast-tracked for examination and disposal, so that they can realize the value of their IPRs at the earliest possible.
• Panel of facilitators to assist in filing of IP applications: For effective implementation of the scheme, a panel of “facilitators” shall be empanelled by the Controller General of Patents, Designs and Trademarks (CGPDTM), who shall also regulate their conduct and functions. Facilitators will be responsible for providing general advisory on different IPRs as also information on protecting and promoting IPRs in other countries. They shall also provide assistance in filing and disposal of the IP applications related to patents, trademarks and designs under relevant Acts, including appearing on behalf of Startups at hearings and contesting opposition, if any, by other parties, till final disposal of the IPR application.
• 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 filing of application: Startups shall be provided an 80% rebate in filing of patents vis-a-vis other companies. This will help them pare costs in the crucial formative years. Startups are provided with an 80% rebate in filing of patents viz-a-viz other companies, bringing down the cost from INR 8,000 to INR 1,600. This helps them cut down on costs in their early years. 50% rebate is also provided in filing of trademarks viz-a-viz other companies decreasing the cost from INR 10,000 to INR 5,000.

Relaxed Norms of Public Procurement for Startups:

To provide an equal platform to Startups (in the manufacturing sector) vis-à-vis the experienced entrepreneurs/ companies in public procurement. Typically, whenever a tender is floated by a Government entity or by a PSU, very often the eligibility condition specifies either “prior experience” or “prior turnover”. Such a stipulation prohibits/ impedes Startups from participating in such tenders.

Faster Exit for Startups:

To make it easier for Startups to wind up operations. The Insolvency and Bankruptcy Bill 2015 (“IBB”), tabled in the Lok Sabha in December 2015 has provisions for the fast track and / or voluntary closure of businesses. In terms of the IBB, Startups with simple debt structures or those meeting such criteria as may be specified may be wound up within a period of 90 days from making of an application for winding up on a fast track basis. In such instances, an insolvency professional shall be appointed for the Startup, who shall be in charge of the company (the promoters and management shall no longer run the company) for liquidating its assets and paying its creditors within six months of such appointment. On appointment of the insolvency professional, the liquidator shall be responsible for the swift closure of the business, sale of assets and repayment of creditors in accordance with the distribution waterfall set out in the IBB. This process will respect the concept of limited liability.

Providing Funding Support through a Fund of Funds with a Corpus of INR 10,000 crore:

In order to provide funding support to Startups, Government will 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 4 years (i.e. INR 2,500 crore per year).

Credit Guarantee Fund for Startups:

To catalyse enterpreneurship by providing credit to innovators accross all sections of society. In order to overcome traditional Indian stigma associated with failure of Startup enterprises in general and to encourage experimentation among Startup entrepreneurs through disruptive business models, credit guarantee comfort would help flow of Venture Debt from the formal Banking System. Debt funding to Startups is also perceived as high risk area and to encourage Banks and other Lenders to provide Venture Debts to Startups, Credit guarantee mechanism through National Credit Guarantee Trust Company (NCGTC)/ SIDBI is being envisaged with a budgetary Corpus of INR 500 crore per year for the next four years.

Tax Exemption on Capital Gains:

To promote investments into Startups by mobilizing the capital gains arising from sale of capital assets. Due to their high risk nature, Startups are not able to attract investment in their initial stage. It is therefore important that suitable incentives are provided to investors for investing in the Startup ecosystem. With this objective, exemption shall be given to persons who have capital gains during the year, if they have invested such capital gains in the Fund of Funds recognized by the Government.

Eligibility Criteria for Tax Exemption under Section 56 of the Income Tax Act:

• The entity should be a DPIIT recognized Startup.
• Aggregate amount of paid up share capital and share premium of the Startup after the proposed issue of share, if any, does not exceed INR 25 Crore.

Apply for Income Tax Exemption

Tax Exemption to Startups for 3 years:

To promote the growth of Startups and address working capital requirements. Post getting recognition a Startup may apply for Tax exemption under section 80 IAC of the Income Tax Act. Post getting clearance for Tax exemption, the Startup can avail tax holiday for 3 consecutive financial years out of its first ten years since incorporation.

Eligibility Criteria for applying to Income Tax exemption (80IAC):

• The entity should be a recognized Startup.
• Only Private limited or a Limited Liability Partnership is eligible for Tax exemption under Section 80IAC.
• The Startup should have been incorporated after 1st April, 2016.
• The exemption shall be available subject to non-distribution of dividend by the Startup.

The recognised startups that are granted an Inter-Ministerial Board Certificate are exempted from Income Tax for a period of 3 consecutive years out of 10 years since incorporation. Startups incorporated on or after 1st April 2016 but before 1st April 2023 can apply for income tax exemption under Section 80-IAC of the Income Tax Act.

A Startup shall be eligible for tax benefits only after it has obtained certification from the Inter-Ministerial Board, setup for such purpose. The Inter-Ministerial Board validates the innovative nature of the business for granting Income Tax Benefits and is constituted by representatives from DPIIT, DBT, and DST.

Apply for Income Tax Exemption

Tax Exemption on Investments above Fair Market Value :

To encourage seed-capital investment in Startups. Under The Income Tax Act, 1961, where a Startup (company) receives any consideration for issue of shares which exceeds the Fair Market Value (FMV) of such shares, such excess consideration is taxable in the hands of recipient as Income from Other Sources.

In the context of Startups, where the idea is at a conceptualization or development stage, it is often difficult to determine the FMV of such shares. In majority of the cases, FMV is also significantly lower than the value at which the capital investment is made. This results into the tax being levied under section 56(2) (viib). Currently, investment by venture capital funds in Startups is exempted from operations of this provision. The same shall be extended to investment made by incubators in the Startups.

• A

  Directors/Partners Documents

  1. Directors/Partners PAN
  2. Directors/Partners ID Proofs
     Aadhaar Card or Voter ID or Passport or Driver's License
  3. Directors/Partners Address Proofs:
     Latest one month Savings Bank statement or
     Latest Telephone Bill on his own name or
     Latest Moblie Bill on his name or
     Latest Power Bill on his own name.
  4. Directors/Partners latest passport size photograph
  5. Directors/Partners Email ids
  6. Directors/Partners Mobile Numbers linked with their Aadhar
  7. Incase of Foreign direcrtors/partners, International Passport
• B

  Company Documents

  1. Certificate of Incorporation/Registration
  2. Patent or Trademark details (Optional)
  3. A proof of concept (website link/video/pitch deck) for startups in Validation stage. For Early Traction and Scaling stage, it is necessary to provide a video or pitch deck in addition to a company website. Ideation stage startups are not mandated to submit a proof of concept.

You can get your startup recognised by The Department for Promotion of Inductry and Internal Trade (DPIIT) in the following steps.

• 1

  User Profile

  Through startupindia portal - 5 Min Job

  Visit the Startup India website www.startupindia.gov.in. For new user - click on "Register" and provide details or simply register using any of your social media accounts. Provide OTP and other details like, startup as type of user, name and stage of the startup, etc. Your user profile will be creatted. For existing user, log in using your credentials.

• 2

  Get Recognised

  Through startupidnai portal - 1 Hour Job

  One the user profile is created, go to "Get Recognised" (ie. this is for new users) and for existing users, go to DPIIT Recognition in the Dashboard. On the ‘Recognition Application Detail’ page, click on ‘View Details’ under the Registration Details section. Fill up the ‘Startup Recognition Form’, attach necessary documents and video/pitch deck(ie. A proof of concept (website link/video/pitch deck) for startups in Validation stage. For Early Traction and Scaling stage, it is necessary to provide a video or pitch deck in addition to a company website. Ideation stage startups are not mandated to submit a proof of concept and click on ‘Submit’.

• 3

  Certificate of Registration

  Through startupindia portal - 3 Days

  Once we fill and submit the application, the DPIIT Officials will go through it and if the application found satisfactory, then they will approve it and an aproval email will be sent to you. You can then log into the portal and download the STARTUP INDIA Recognition Certificate.

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