Startup India Registration Process
Today we discuss about the Startup India Registration Process for the Business in India. Recently Government of India officially defines the definition of a startup and clearly said regarding the business legal entity and their type which is eligible for the scheme.
Startup India “Startup Definition”
Any Legal entity will be identified as a startup.
- Till up to five years from the date of incorporation.
- If its turnover does not exceed 25 crores in the last five financial years.
- It is working towards innovation, development, deployment, and commercialisation of new products, processes, or services driven by technology or intellectual property.
Points to be remember :-
A corporation, entity or a business is termed as a start-up if
- The entity is registered under Companies Act, 2013
- It is registered under section 59 of Partnership Act, 1932, as a partnership firm
- Or registered under Limited Liability Partnership Act, 2002, as a limited liability partnership
Note :- Means Sole Proprietorship Firm are not under the Startup India Scheme.
In order to obtain tax benefits, one has to obtain a certificate from the Inter-Ministerial Board of certification. The board consists of the following:
- Joint Secretary, Department of Industrial Policy and Promotion.
- Representative of Department of Science and Technology.
- Representative of Department of Biotechnology.
Points to be Remember :- an entity shall be considered a startup only if it aims to develop and commercialise – a new product or a service or a process or significantly improves on a product or service or process which will add significant value for customers or workflow.
So if your Startup is like another Ecommerce Startup Website or IT Sector then its not Eligible for the tax benefits as you will be not defined as Startup.
How to Apply for the Startup India Scheme Process and Form
In the official notification which is issued by the govt in that said startups have first of all register their business as Legal entity as Private limited company, Limited Liability Partnership, Partnership Firm then they have to register through a mobile app which is not yet launch or through the portal of DIPP(Department of Industrial Policy and Promotion)
Update on 31/07/2016 – Now Startup India official Website has been already launched. Below are Some Superb Helpful Resources to Understand about Startup India.
- How to Register on Startup India Portal and Mobile App
- Startup India Scheme Details in Hindi
- Startup India FAQ Series
- Startup India Ultimate List of Incubators in India
- How to Get Recommendation Letter From Startup India
Helpful Videos –
The Startup will have to submit their application along with any of the Following Documents :-
- A recommendation in a format specified by DIPP from an incubator established in a post-graduate college in the country.
- A letter of support from any central or state government funded incubator to promote innovation.
- A recommendation in a format specified by DIPP (with regard to innovative nature of business) from any incubator recognised by the Central Government.
- A letter of funding of not less than 20 per cent in equity by any incubation or angel fund/PE fund/accelerator or angel network duly registered with Securities and Exchange Board of India that endorses its innovative nature of business.
- A letter of funding by the Central or State government as part of any scheme to promote innovation.
- A patent filed and published in the Journal by the Indian Patent Office in areas affiliated with the nature of business being promoted.
The Action Plan is divided across the following areas:
- Simplification and Handholding
- Funding Support and Incentives
- Industry-Academia Partnership and Incubation.
Towards these efforts, the Government is planning to launch a Mobile App to provide for registration for the Startups with relevant agencies of the Government. A The Mobile App will allow to integrate with Ministry of Corporate Affairs and Registrar of Firms for information exchange and processing of the registration application. The App provides for a collaborative platform for various Startup ecosystem partners with participation from a national network of venture funds, incubators, academia, mentors, etc. The Application will be made available from April 01, 2016 on all leading mobile/ smart devices’ platforms.
The “Startup India Hub” will be an important stakeholder in this vibrant ecosystem which will work in close association with Central and State Governments, will assist start ups in obtaining accelerators, business structuring advisory, technology evaluation, organizing workshops, etc.
Adoption of IPRs
IPRs is a strategic business tool for a start ups too. The following measures are being taken:
- Fast-tracking of Start up patent applications
- Panel of facilitators to assist in filing of IP applications
- Government to bear facilitation cost
- Rebate on filing of application
- Wind up operations for the Start ups
As per the ‘Startup India: Action Plan’, 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. The bill talks about the appointment of the insolvency professional, the liquidator shall be responsible for the swift closure of the business, sale of assets and repayment of creditors. 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
Key features of the Fund of Funds are highlighted below:
- The Fund of Funds shall be managed by a Board with private professionals drawn from industry bodies, academia, and successful Start ups.
- Life Insurance Corporation (LIC) shall be a co-investor in the Fund of Funds
- The Fund of Funds shall contribute to a maximum of 50% of the stated daughter fund size.
- The Fund shall ensure support to a broad mix of sectors such as manufacturing, agriculture, health, education, etc.
Tax Exemptions to Start ups
It is stipulated that 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. This will act as an incentive for the investors. Similarly, tax exemptions will be given to start ups for a period of three years.
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. It has been proposed that the same shall be extended to investment made by incubators in the Start ups. The same shall be extended to investment made by incubators in the Startups.
In order to increase the R&D efforts in the country, the Government is additionally, deciding to set up 31 centres of innovation and entrepreneurship at national institutes.
Hope now you clearly understand about the Startup India Scheme and Procedure with the Benefits so Just Register Today your Startup Legal Entity Online with MyOnlineCA which is India’s leading On Demand Legal Services in India where you can register your startup completely online at fingertips.
You can Download Here – “startup india action plan download”
Credit and Source :- Govt official website, YourStory.