Start-up India Scheme: A helping hand for the Entrepreneurs

By CIOReview Team

Start-up India Scheme: A helping hand for the Entrepreneurs

The Government of India as its flagship initiative have introduced various schemes to boost Indian start- up system, youth employment and woman empowerment on a large scale which will help in the overall development of the country.

“I see start-ups, technology and innovation as exciting and effective instruments for India’s transformation.” – PM Narendra Modi.

Following this vision and believe, under the Start-up India Scheme, Government intends to “Give wings to Young Entrepreneurs” to accelerate the spread of the Start-up Culture in India.

As economic developments are the core of Modi Government, this scheme was introduced for start-ups to avail regulatory and tax benefits, capitals gains and tax redemption and wide access to government funding. This scheme aims at promoting bank financing for start-up ventures to boost entrepreneurship and encourage start-ups with jobs creation.

The Scheme was initiated with an Action Plan that included -

  • Simplification and Handholding.
  • Industry-Academia Partnership and Incubation.
  • Funding Support and Incentives.

Features of Start-up India Scheme (that cannot be missed!)

The Government of India recognises that the start-ups as working towards innovation,development, deployment, and commercialisation of new products, processes, or services which are driven by technology.

This makes it extremely important that all the eligible start-ups get the required assistance for the initial years of their business operations. The Start-up India Scheme comes with various benefits which are why most of the entrepreneurs prefer to get registered under this scheme.

The Start-up India Scheme provides -

  • 80% government fee reduction in patent filing and 50% in trademark filling.
  • Free legal assistance with simpler entry and exit norms.
  • Winding up of the company in case of insolvency/bankruptcy in just 90 days.
  • Tax exemption for the initial 3 years of operations or investing in Small and Medium Enterprises.
  • Government funding of around Rs. 10,000 Crore through Alternate Investments Fund.
  • Relief from the various environment and labour laws for the initial period.

Does your business fall under the Scheme?

Who does not want to benefit from tax exemptions and financial support?

What will you do if someone suggests that you can get the initial help for your ideas and vision?

Well, ask me because I will definitely make the best use of it. However; for any Start-up to avail benefits under Start-up India initiative needs to fulfil certain conditions because not every start-up can be registered in this scheme.

If you wish to register your business under the Start-up India Scheme make sure -

  • The business is incorporated as a Private Limited Company, Partnership firm or Limited Liability Partnership firm as per the Companies Act, 2013.
  • The start-up can be registered up to 7 years from the date of incorporation, and 10 years in case your start-up is in the biotechnology sector.
  • The annual turnover must not, in any case, exceed from Rs. 25 Crore in any of the financial year since its incorporation.
  • The company/start-up must not be formed through splitting or reconstruction of an already registered business structure.
  • Your business model must be scalable with high potential for employment or profit generation.
  • It should be funded either by angel fund, incubation fund or private equity fund and must attain approval from the Department of Industrial Policy (DIPP).
  • The companies providing funding must register with the Securities and Exchange Board of India (SEBI).

How can you Register for Start-up India?
Step – 1: Incorporate your business

The first step is to register your business as either a private limited company, partnership firm or a limited liability partnership with the Ministry of Corporate Affairs. For this, you need to get company PAN, bank account number and other compliances like a certificate of incorporation.

Step – 2: Registration

After successfully incorporating your firm you can now register your business as a start-up by a simple online procedure. Visit the Start-up India Website and fill the online form with all your business details and documents like:

  • Letter of recommendation regarding the nature of the business
  • Letter of support by incubator
  • Letter of recommendation by govt. in DIPP format
  • Letter of funding
  • Certificate of incorporation or partnership
  • A brief description of your services and products.

Step – 3: Recognition no.

After filing and uploading all the documents, you will receive a recognition no. for your start-up and on successful verification from the concerned department a certificate of recognition will be issued.

One must be careful while uploading documents for one is liable to pay a fine of 50% of the paid-up capital of their start-up with a minimum fine of Rs. 25,000 if the documents are not uploaded properly or wrong documents are uploaded.

Tax Benefits for Entrepreneurs

Tax Benefits are a major aspect of this Scheme, and the Government to reduce the regulatory burden from the entrepreneurs have levied various taxes for the initial years of their operations in the market.

This makes people focus more on their core business and get the required help wherever possible.

  • Start-up with an Inter-Ministerial Board Certificate is exempted from paying income tax on the amount of profit generated for 3 years.
  • Investments made by incubators, resident angel investors not registered as venture capital funds above the fair market value are exempted from any tax.
  • Taxes on long-term capital gains and capital gains from the selling of any residential property is also excluded and not considered as taxable.
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