Clients
In India, startups are becoming increasingly popular. The Government of
India, led by Prime Minister Narendra Modi, has launched and promoted the Startup India
initiative to identify and encourage startups in order to grow the Indian economy and attract
talented entrepreneurs. The Startups India Scheme helps to support the economy by generating a
significant number of jobs across all industries. The program is designed to encourage startups
to pursue modern and creative business concepts that would otherwise be unable to do so due to a
lack of funding. As soon as a company joins this scheme, it will have access to a plethora of
government tenders as well as tax exemptions, ensuring smooth business development. If you need
assistance with the Startup India Registration Process, please contact our experts at
Legalraasta.
One of the scheme’s goals has been to make it easier for startups to register in India by reducing regulatory burdens and allowing them to focus on their core business while keeping compliance costs low, as well as providing multiple benefits, in addition to the massive networking opportunities provided by the Government of India’s bi-annual startup festivals, both domestically and internationally.
The startup India scheme allows entities organized as a Private Limited Company, Partnership Firm, or Limited Liability Partnership to file. These businesses must have an annual turnover of fewer than 100 crores and have been in operation for at least ten years from the date of incorporation/registration. The aim of such an organization should be to innovate, create, or enhance products, services, or processes.
Part A of Type EWB 01’s E-Way Bill is used to collect asset information, such as invoice data. As a result, the following specifics must be included.
Startups would be able to self-certify that they are complying with nine labor and environmental regulations. For a term of three years, no inspections would be performed in the case of labor regulations.
Startup India’s mobile application allows businesses to register and upload required documents. Approvals, registrations, and reporting enforcement can all be handled through a single window.
The process of filing a patent will be streamlined. The Startup would receive an 80 percent discount on the patent application fee. The startup will only be responsible for legislative fees, while the government will be responsible for all facilitator fees.
Seven new research parks will be developed to provide facilities for startups in the R&D sector as part of the Startup India program, which will promote research and innovation among students who are aspiring entrepreneurs.
Both new and seasoned entrepreneurs will be given equal opportunities. This was previously impossible because all applicants were required to have either “prior experience” or “prior turnover.” However, public appropriation rules for startups have recently been relaxed.
For the first three years, startups are excluded from paying income tax.
A refund of 80% would be available to startups when they file a patent application
For patent applications, a fast-track system has been developed
There will be no compliance with environmental laws or labor post-self-certification for the first three years
A startup’s central hub in India will begin with a single point of contact that will be available after the site goes live
The government will bring in a total of 2500 crores as an initial investment, with an additional 10000 crores to be pumped in over the next four years
A mobile app will be released that will allow startups to register within one day using the app.
Capital gains are exempt from taxes
It is necessary to submit a letter of recommendation following a registration form. Any of the following can be included as valid:
A recommendation from an incubator (related to the creative nature of the business) approved in an Indian post-graduate college, in the format prescribed by the Department of Industrial Policy and Promotion (DIPP).
A letter requesting assistance from an incubator, which is financial assistance provided by the Indian government (in relation to the project) as part of any set-up scheme with the aim of promoting innovation.
A recommendation letter (in the form of a DIPP set out format) from an incubator defined by the Government of India (in relation to creative business nature).
A funding letter from any Incubation Fund/Angel Fund/Private Equity Fund/Accelerator/Angel Network that promotes businesses of creative nature and is properly registered with SEBI.
A support letter from the Indian government or a state government as part of a program to promote creativity.
An Indian Patent Office filed and published patents in the Journal in certain fields that are officially associated with the essence of the industry.
It is necessary for you to upload the certificate of incorporation of your business/LLP (Registration Certificate in case of a partnership)
Give a quick summary of the innovative nature of your business.
The first step is to incorporate your business. You must first establish a Private Limited Company, a Partnership Corporation, or a Limited Liability Partnership to start your business. You must follow all of the standard procedures for registering a company, including a certificate of Incorporation/Partnership Registration, a PAN, and other legal requirements
Then the business needs to be registered as a startup. The whole process is simple and online. All you have to do is go to the Startup India website and fill out a form with information about your business. Next, enter the OTP that was sent to your e-mail address, as well as other information such as the startup as the type of user, the name and stage of the startup, and so on. The Startup India profile is generated after this information is entered.
After building a profile on the platform, startups can apply for various acceleration, incubator/mentorship initiatives, and other challenges, as well as gain access to resources like the Learning & Development System, Welfare Schemes, Government Actions for Startups, and techie services.
The Department for Promotion of Industry and Internal Trade (DPIIT) Recognition is the next move after building a profile on the Startup India website. This recognition allows startups to take advantage of advantages such as access to high-quality intellectual property services and infrastructure, relaxation of public procurement rules, self-certification under labor and environmental laws, ease of business winding up, access to Fund of Funds, tax exemption for three years, and tax exemption on investments above fair market value.
If you are a new user, press the ‘Get Identified’ button to get DPIIT Recognition. If you’re already a customer, go to the ‘Dashboard button’ and then to ‘DPIIT Recognition.’
The page titled “Recognition Application Information” appears. On this tab, go to the Registration Details section and click on ‘View Details.’ Fill out the ‘Startup Recognition Form’ and hit the ‘Submit’ button.
You will receive a recognition number for your startup as soon as you apply. The certificate of recognition will be given after all of your records have been examined, which normally takes two days after you upload your information online.
However, exercise caution when uploading documents. If it is discovered after further inspection that the appropriate document was not uploaded, the incorrect document was uploaded, or a forged document was uploaded, you will be fined 50% of the startup’s paid-up money, with a minimum fine of Rs. 25,000.
The validity of the Indian startup recognition certificate is for ten years from the date of registration, and it expires when the company reaches a turnover of one hundred crores.
3 parts of Startup India Certificate Recognition
After validating the specific business process and other eligibility requirements, DPIIT issues a Startup India certificate to the newly formed company upon receipt of an application.
If a startup is further authorized by the Inter-Ministerial Board, an investment made on the premium by investors is tax-exempt u/s 56(2)(viib) of the Income Tax Act.
This exemption is valid until the total paid-up equity capital plus share premium for the startup does not exceed INR 25 crore. A startup must file a Form-2 declaration with DIPP to be eligible for the angel tax exemption.
Out of a ten-year period, the startup will be eligible for a three-year tax holiday. The startup must file a separate application under Form-1 for income tax exemption under Section 80-IAC, and the Income Tax Authority will either approve or deny the application. This application can only be submitted after a Startup India Certificate has been issued.
The majority of startups are based on generating sales and increasing income by different strategies, which is a positive thing. The majority of startups are bootstrapping their businesses with their own capital in the early stages. Reducing expenses is one way to increase your earnings. The government keeps 30% of our earnings in the form of taxes, resulting in higher costs. By simply registering our startup with the Startup India initiative, we can save this cost for three years.
However, a myth is circulating in the industry that all startups are eligible for tax incentives, which is a myth. Not all startups will be eligible for tax breaks. The terms “startup recognition” and “startup recognition with tax” are not interchangeable.
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