India is currently one of the largest startup ecosystems in the world. Cities like Bangalore and Hyderabad are becoming the hub for new businesses. And with the launch of a new GOI initiative, Startup India program, there has been an even more incredible jump in the number of startups in India, primarily due to the ease of registration.
The launch of Startup India scheme is definitely good news for new startups in India. But if you’re planning to open a new startup, you will have to know the compliances and the regulations required in the registration process. Let us look at the eligibility criteria for a startup, the benefits under Startup India scheme, and how to register startup in India.
What is a Startup?
A startup is a company in its early stages of operations, aiming to resolve a real-life issue with an innovative product or service. These ventures are new, small in nature, and funded by either founding entrepreneurs or a group of investors who believe in the idea.
Eligibility criteria for being a startup:
Startups that meet the requirement as prescribed under G.S.R. notification 127 (E) are eligible to apply for recognition under the Startup India program, provided the startup is able to produce the required documents at the time of application. The eligibility criteria state that the startup should be incorporated as a private limited company or a limited liability partnership or registered as a partnership firm, with a turnover of fewer than 100 crores in any previous financial year.
Time-wise, the entity should be less than ten years old from the incorporation date. It should also be working towards innovations/ improvement of existing products, services and processes with the potential to generate employment/ create wealth.
What is Startup India?
Startup India, an initiative of the G.O.I., intends to build a strong and conducive ecosystem for the growth of startup businesses in India. It aims to drive sustainable economic growth and generate large scale employment opportunities. Through this initiative, the GOI aims to empower startups to grow through innovation and design.
Benefits Under Startup India
The Startup India initiative by the G.O.I. has been really helpful and beneficial for new startups. From making the complete process online to over 10,000 crores rupees’ fund reserve as venture capital, Startup India has provided many additional benefits that are waiting to be grabbed by new startups. These benefits include a tax exemption for three years, eligibility for government tenders, capital gain, and an easy exit option within 90 days from the date of application of winding up. Let us now take a look at the Startup India registration process.
How to register startup in India
Step 1: Incorporate your business
This involves regular steps like choosing the company’s name and acquiring your Digital Signature Certification (D.S.C.) and Director Identification Number (DIN). For L.L.P.s, startups need to obtain Designated Partner Identification P.I.N. (DPIN). You also need to take care of other regular compliances like filing electronic Memorandum of Association and Articles of Associations.
Step 2: Registering with Startup India
Once your business is incorporated with the Ministry of Corporate Affairs (M.C.A.), you must be registered as a startup. Earlier, this process used to extract a hefty amount of time. But with Startup India, the process has been made a lot smoother. Now all you need to do is log on to the Startup India website, fill up the form with details of your business and upload the required documents.
Step 3: Tax Exemption
Once you’re done with uploading the documents, you’ll have to provide the required documents if you want to avail the benefits of the 3-year tax exemption rule by the G.O.I. You must be certified by the Inter-Ministerial Board (I.M.B.) in order to access these benefits.
Step 4: Self-certification
To sum it up, you must self-certify that you, as a startup entity, satisfy the following conditions:
a) are a Private Limited Company, Partnership firm or a Limited Liability Partnership
b) are incorporated/registered in India, not before 10 years.
c) have a turnover of fewer than 100 crores per year.
d) are Innovative. Your business must be working towards innovating something new or significantly improving the existing used technology.
e) are not a branch of a previous business and are not a result of splitting up or reconstructing an existing business.
Step 5: Recognition Number
Once you have successfully entered all of your details and self-certificates, you will immediately receive a recognition number for your startup. However, the certificate of recognition will be issued after the examination of all your documents.
And thus, your Startup India Registration process is done.