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Benefits of Startup India Registration in India

Benefits Of Startup India Registration In India

Startups are emerging as the future of the business world. They are small business setups with creative ideas. They bring in opportunities for job creation and capital growth with a boost of innovation and can contribute a lot to the development of the economic system of a country. Let’s discuss the benefits of Startup India registration.

To boost innovation and incentivize startups, the Government of India has launched Startup India Scheme in 2016. Through this scheme, the Government aims to provide a platform for startups to explore their potential and create job opportunities for people. Eligible companies can get recognized as startups by the DPIIT and access easier compliance and fewer formalities. Numerous other benefits of Startup India Registration can be availed by the DPIIT recognized startups.

Eligibility Criteria for Startup India Scheme Recognition

Following are the criteria that a company must meet to get recognition under Startup India Scheme:

  1. The company shall not be in operation for a period exceeding ten years from its incorporation date.
  1. To be recognized as a Startup, the company must be incorporated as :
    1. Private Limited Company, or 
    2. Partnership Firm, or 
    3. Limited Liability Partnership
  1. The annual turnover of the startup must not exceed Rs 100 crore in any financial year since its incorporation.
  1. The startup should be an original entity and not a  reconstruction of an already existing company.

Benefits of Startup India Registration 

Following are some of the key benefits of Startup  India registration that companies can avail:

Self- Certification 

  • One of the major benefits that a startup can avail is that it can self-certify for six labour laws and three environmental laws through an online procedure. The procedure and compliances are very simple and easy.
  • No inspection will be conducted for five years in case of compliance with labour laws. However, the inspection can be carried out if a credible complaint is received.
  • In case of compliance with the environmental laws, only random checking will be done.

Easy winding up of companyBenefits of Startup India Registration 

  • Startups registered under the Startup India Scheme can easily wind up their company within ninety days of applying for insolvency.
  • Through this scheme, the startups can escape the long and complex exit process and easily reallocate their capital and resources.
  • For winding up, the startup shall appoint an expert in insolvency to liquidate their assets and clear up the debts, if any.

Research and Innovation related benefits

  • Under this scheme, several research parks will be set up to facilitate research and development for new startups and encourage innovation among young entrepreneurs. 

IPR Protection and Patent Application

  • Since the primary objective of the Startup India Scheme is to promote innovation among startups, provisions for the protection of such ideas is very important. Thus, this scheme aims to make the process of IPR application  less time consuming and budget-friendly for startups.
  • The application filed by startups will be fast-tracked to make the process faster.
  • Startups are exempted from the facilitation costs for the patent or trademark application. They are only required to pay the statutory fees. 
  • 80% rebate will be provided to the startups while filing patent applications compared to other companies.
  • 50% rebate will be provided to the startups while filing of trademark application as compared to other companies 

Tax Exemption under Section 80IAC

  • Under this scheme, startups shall be exempted from income tax liabilities for the first three consecutive financial years.
  • This exemption will facilitate the startups to reallocate their funds for their business growth.

Section 56 Exemption – Benefits of Startup India Registration

  • Under Section 56(2) VIIB of the Income Tax Act, exemptions shall be given to the investments made in the startups with a net worth exceeding  Rs 100 crore or annual turnover exceeding Rs 250 crores.
  • An exemption shall be given to the investments made by accredited investors, Non-residents into startups with a net worth of amount exceeding  Rs 100 crore or annual turnover exceeding Rs 250 crores.
  • An exemption shall be given up to an aggregate limit of Rs 25 crores on consideration of shares received by startups registered under this scheme.

Easier Public Acquisition Norms

  • The Startup India Scheme[1] aims to provide easier participation to the startups in the public procurement process through the Startup India Scheme. This will give these companies easier access to many potential platforms.
  • Startups registered under this scheme will be provided with opportunities to list their products on the Government e-marketplace. They can register themselves as sellers on such platforms and avail themselves of multiple benefits.
  • While filing Government tenders, the startups registered under this scheme shall be exempted from submitting Earnest Money Deposits.
  • Registered Startups shall be exempted from the criteria of ” prior experience” in the manufacturing sector. This exemption is subject to the maintenance of the required quality standards of the products.

Registration via Mobile Application

  • DPIT recognized startups can complete the registration by filing a single form on Startup India Mobile Application 
  • This aims to provide a single-window clearance for all the startups’ registration formalities, various approvals, etc.

Conclusion – Benefits of Startup India Registration

The Government of India has taken the initiative to boost the innovation and development of young entrepreneurs via the Startup India Scheme. This scheme can be very beneficial for the progress of startups in India. However, to avail of the benefits of Startup India Registration, companies must be recognized as a startup by the DPIIT.

Read our article:Proprietorship Firm vs. Private Limited Company : The Important Differences

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