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    Published Mon, 12 Sep 2022 | Updated Mon, 12 Sep 2022 Income Tax-Personal

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    Startup India Scheme was launched by the Government on 16th of January 2016. It is an appreciable initiative of the Indian Government which intends to build a strong eco-system for supporting innovation and to drive sustainable economic growth and transforming India into a country of employment generators. The government of India intended to empower startups to grow through innovation and design. It comprised 19 action items spanning across three key areas of ‘simplification and handholding’, ‘funding support and incentives’, and ‘industry-academia partnerships and incubation’. Under this initiative, startups are aimed to achieve growth through technology and innovation. Due to that, various benefits are provided to entrepreneurs for establishing startups.

    The main motives of this scheme are mentioned below-

    • Developing infrastructure to foster and facilitate entrepreneurship;

    • Increase funding support for enhancement and growth of innovation driven enterprises;

    • To promote awareness and adoption of IPRs by providing access to high quality intellectual property services & resources, including fast-track examination of patent applications and rebate in fees;

    • Better regulatory environment including tax incentives and relaxed compliance norms.

    A Three-Pronged Strategy

    Startup India has created a three-pronged strategy to operationalise its action plan towards a ‘pro-entrepreneurship’ attitude, which focuses on addressing the most vital issues faced by entrepreneurs during various stages of their businesses and developing the Indian startup ecosystem to one of the biggest startup ecosystems globally. This strategy aims to:

    • facilitate a common platform to connect the entire ecosystem while reducing information asymmetry;

    • provide benefits and other necessary support; and

    • engage regional entrepreneurs in transforming their ideas into business ventures.

    Eligibility for Registration under Start Up India Scheme:

    • Must be registered as a Private Limited Company under Indian Companies Act 2013, a Limited Liability Partnership under Indian Limited Liability Partnership Act, 2008 or a Partnership firm under the Indian Partnership Act, 1932.

    • Should not be registered or incorporated for more than 10 years from its date of incorporation.

    • Annual turnover not exceeding Rs. 100 crores for any of the financial years since incorporation/registration.

    • Must be working towards innovation, development or improvement of products or processes or services, or working towards employment generation or wealth creation.

    • Should be a fresh venture and it cannot be formed by splitting up or reconstructing an existing business. 

    Benefits of startup registration:

    1. Self-Certification

    Startups are allowed to self-certify their compliance under 9 Labour and 3 Environment laws for a period of 3 to 5 years from the date of incorporation.

    2. Ease in Registration through Mobile APP

    A mobile application along with a website has been launched by the Government of India to make the registration process simplest for entrepreneurs. The registration process can also be completed through a Startup India mobile application which encloses a single form that permits startups to complete the registration formalities.  

    3. Reduction in costs

    A list of facilitators of patents and trademarks is provided by the government for the registration of startups. The high-quality Intellectual Property Rights Services along with the fast examination of patents are provided at a very low cost. The facilitator fees will be borne by the government while only the statutory fees need to be paid by the start-up. A start-up will get an 80% reduction in the cost of filing the patents.

    4. Easy access to capital

    Rs.10,000 crore of funds is set by the government of India to support the entrepreneurs operating their business. The financial institutions and banks are guaranteed by the government to encourage them to provide venture capital to start-ups. 

    5. Tax exemption for 3 years

    Startups are exempted from any tax Liabilities for 3 Years. Funds from incubators and angel investors are also exempted i.e they can capitalize their funds for business growth. The government also provides some tax relaxation on the front investment above the fair market value.

    APIIT (Department for Promotion of Industry and Internal Trade) recognized Startup can avail the Angel Tax Exemption benefits if the overall share value is less than 25 crore rupees.

    6. Applying for government tenders

    Startups are eligible to apply for government tenders. An exemption is provided to the start-ups from the “prior experience/turnover” criteria applicable for normal companies filing the government tenders. 

    Step-by-step startup registration in India:​

    1. Incorporation of a business entity

              An entity needs to be incorporated as a Private Limited Company or a Limited Liability Partnership or a Partnership firm for applying as a “Start Up”. 

    2. Registration under Startup India initiative

            The registration of the firm or company needs to be done under the Startup India initiative of the government of India. The form is available on the website and mobile application. The details need to be filled up along with uploading of certain documents as well. 

    3. Uploading of documents / Documents required for startup registration

    1. A Brief Write up on how the business is working towards: innovation, employment, wealth creation is required to be provided in the registration form. 

    2. Incorporation certificate of Private Company or LLP or a partnership deed in case of Partnership firm

    3. A brief description of the business

    4. A proof of concept (website link/video/pitchdeck) for startups in the Validation stage. For the 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. 

    5. Company PAN Card

    6. Details of Directors

    7. Patent & Trademark Details (Optional)

    Conclusion: 

    A Startup is now the most popular business structure in India. Due to the “Startup India” initiative by the Government of India, a start-up is the most preferred one.  The initiative has provided certain benefits such as tax exemption, lesser costs, etc to the people opting for it. The government has tried its best to simplify the registration process of startups by making it completely online. The startup is the best option for beginning a new innovative business.