Start up India Scheme

Introduction:

The Government of India has instituted a comprehensive array of initiatives under the Startup India campaign to bolster the growth and development of startups across the nation. These initiatives encompass several facets aimed at simplifying regulatory processes, promoting innovation, providing financial incentives, and facilitating ease of doing business for startups.

Key Initiatives Under the Startup India Campaign:

1. Definition of a Startup: To be considered a startup eligible for benefits, a company must meet the following criteria:

• Age of the Company: The date of incorporation should not exceed 10 years.
• Type of Company: It should have been incorporated as a Private Limited Company, Registered Partnership Firm, or Limited Liability Partnership (LLP).
• Annual Turnover: Annual turnover should not exceed Rs. 100 crore for any financial year since incorporation.
• Original Entity: The company should have been formed originally by the promoters and should not have been created by splitting up or reconstructing an existing business.
• Innovative & Scalable: The startup should have a plan for developing or improving a product, process, or service and/or possess a scalable business model with high potential for wealth and employment creation.

1. Benefits from DPIIT (Department for Promotion of Industry and Internal Trade): Startups recognized by DPIIT can access various advantages, including:

• Simplification and Handholding: Easier compliance, streamlined exit procedures, legal support, fast-tracked patent applications, and a dedicated website for information dissemination.
• Funding & Incentives: Exemptions on Income Tax and Capital Gains Tax, a fund of funds to infuse more capital into the startup ecosystem, and a credit guarantee scheme.
• Incubation & Industry-Academia Partnerships: Establishment of incubators, innovation labs, events, competitions, and grants.

1. Self-Certification: To reduce the regulatory burden on startups, they are allowed to self-certify compliance for various labor and environmental laws. For labor laws, there will be no inspections for five years unless a credible complaint of violation is received. For environment laws, startups in the ‘white category’ (as defined by the Central Pollution Control Board) can self-certify compliance with random checks conducted.
2. Tax Exemption under Section 80IAC: Eligible startups are exempt from paying income tax for three consecutive financial years within their first ten years of incorporation. Criteria include recognition by DPIIT and incorporation on or after April 1, 2016.
3. Section 56 Exemption: Investments into eligible startups by listed companies with specific financial thresholds are exempt from Section 56(2)(VIIB) of the Income Tax Act.
4. Easy Winding up of Company: Simplified procedures allow startups to wind up operations more efficiently, enabling quicker reallocation of capital and resources.
5. Patent Application and IPR Application: The government facilitates the patent application process, offers a panel of facilitators for IP applications, covers facilitation costs, provides rebates on filing applications, and fast-tracks patent applications for startups.

These initiatives collectively aim to foster innovation, promote entrepreneurship, and create an environment conducive to the growth and success of startups in India. The government’s commitment to simplifying regulatory processes and offering financial incentives plays a pivotal role in driving the nation’s entrepreneurial ecosystem forward.

For More information visit : https://www.startupindia.gov.in/

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