Start-Up India Scheme – Features, Registration, Eligibility

Start-Up India Scheme – Features, Registration, Eligibility, Benefits

BRIEF INTRODUCTION

Indian Government came up with a Start-up India Scheme, which was an initiative to support entrepreneurs in starting their own businesses. Under the scheme, the Government is looking to provide benefits to the entrepreneurs having an idea in their mind and the same is capable of being implemented. The Start-up India Scheme was launched on 16^th August 2016 and the same was inaugurated by Prime Minister Narendra Modi.

The aim behind the introduction of such a scheme was to provide a path for sustainable development and proper implementation of ideas along with innovation. Apart from sustainable development and innovation, Start-up India Scheme, also focused on the generation of new employment opportunities within India.

Such an initiative was required since many startups were gaining huge success and momentum in India. This step was very crucial for the development of the Indian economy and attracting and motivating young and talented entrepreneurs to come up with their ideas and innovation, which will indeed prove to be beneficial for India.

MEANING OF STARTUP

Start-up basically means, establishing a new company with some new idea or innovation. Start-up India Scheme was all about helping entrepreneurs to establish their own businesses.

The main difference between a start-up and other forms of business is that a start-up generally tends to offer a new product/service, which was not recognized previously by any other business. Thus, start-ups are generally known for their presence in the innovation market.

In a start-up, a company generally develops a new product/ service or recreates any existing product/service which will indeed be a better version of the earlier product. But the main problem that arises in such a case, is funding. As we know, funding is the most important factor for the success and sustainability of any business.

DEFINITION OF STARTUP

A business is termed as a start-up, based on the following conditions –

1. The business is incorporated as a Private Limited company under the Companies Act, 2013 or a Partnership Firm under the Indian Partnership Act, 1932, or a Limited Liability Partnership under the Limited Liability Partnership Act, 2008.
2. Such a business incorporated, be considered as a start-up, for a maximum of 10 years from the date of its incorporation.
3. The main objective of such business shall be innovation, development, improvement of existing products, services, and processes and also generate a significant amount of employment.
4. The annual turnover of such a business shall not exceed Rs 100 crores, at any point of time.

When are you planning to establish your startup?

• Few questions have arisen whenever you considering starting a business. Before you begin your company, you must evaluate all of the compliance requirements and Pvt ltd Company Registration needs.
• Because an entrepreneur is too busy during the early stages to get their company registration on his own, it is always better to get in touch with someone with an experienced-chartered accountant with experience in the area of company formation.
• A chartered accountant will not only assist you with company formation, but also with GST registration, income tax filing, and income tax return preparation by yourself.
• there is requirements of some reliable experience professionals like an online chartered accountant who are considered as experts in company registration/GST registration experts, Income tax consultants, business advisors, company secretary for corporate compliance expert, wealth managers, income tax consultants, GST Registration experts, etc. who are qualified and experienced and well versed with the applicable different law provisions.

ENTITIES ELIGIBLE FOR REGISTRATION UNDER START-UP INDIA SCHEME

The entity, to apply for registration under the Start-up India Scheme, shall comply with the following conditions –

1. An entity shall be formed as a private limited company or a limited liability partnership, registered in India.
2. A said entity shall be a newly established entity or an entity not more than 5 years old.
3. The total turnover of such entity shall not exceed Rs 25 crores, at any point in time.
4. An entity shall obtain approval from the Department of Industrial Policy and Promotion (DIPP).
5. To get such approval, the entity is required to get funded by an Incubation fund, Angel Fund, or Private Equity Fund.
6. An entity should have obtained a patron guarantee issued by the Indian Patent and Trademark Office.
7. They must be in receipt of a recommendation letter by an incubation.
8. The entity is required to disclose its innovative schemes or products.

CHALLENGES UNDER START-UP INDIA SCHEME

1. Many people believe that a start-up is something which one can create in their mind, but in reality, the execution of their new idea or plan does not take place, due to one reason or the other.
2. The perspective of government by launching start-up India plan and helping young entrepreneurs is a very short-term perspective.
3. It is also seen that for starting a new business, a competent workforce is also required, which is not available in the case of start-ups, since they do not have enough funds to afford one.
4. As compared to other forms of business, the risk of failure is higher in start-ups because they tend to take steps for faster growth.

STARTUP INDIA HUB

All the start-ups registering under the Government of India, are entered into a single window known as the start-up ecosystem. Such a facility to connect with this ecosystem is available to all the start-ups.

Under this ecosystem, the Government of India fosters to provide all the necessary resources required till the incubation of start-ups. This helps in providing a collaborated platform known as a start-up hub, which will provide the start-up creators to get funding and gather incubation.

DOCUMENTS REQUIRED UNDER START-UP INDIA SCHEME

 

1. Registration or Incorporation Certificate duly issued by the Registrar.
2. Complete details of the directors of the proposed entity.
3. Full proof detailed plan along with their supporting documents.
4. Registration details of their Patent and Trademark.
5. PAN number issued in the name of the entity.
6. Innovation and Improvement list of activities to be undertaken by them.

PROCEDURE UNDER START-UP INDIA SCHEME

• • As per the notification by the Government of India, the start-ups are required to get registered as a legal entity in the form of a Private Limited and Limited Liability Partnership Firm.
  • After complying with this, they need to make an application through the mobile application offered under the scheme or through the portal of DIPP (Department of Policy and Promotion).

STEP BY STEP PROCESS UNDER START-UP INDIA SCHEME

1. The applicant is required to log in to the Start-up India Portal.
2. After this, the applicant shall enter the details of their Legal Entity.
3. Along with details, the following information be also provided –

• • The incorporation documents issued by the Registrar
  • Detail related to the Incorporation/Registration Date.
  • PAN number issued in the name of the entity
  • Complete address of the business along with the Pin Code & State.
  • Details related to the authorized representative of the entity.
  • Complete details of all the Directors and Partners of the proposed entity.

4. After providing all the required information, the applicant is required to upload the supporting documents and a self-certification in the prescribed manner.
5. Successful submission of the application, the application will be forwarded to the requisite authority for verification.

BENEFITS UNDER START-UP INDIA SCHEME

1. Benefits related to Intellectual Property Rights: the scheme provides high-quality Intellectual Property resources. The Government is planning to provide IPR, to encourage the start-ups for commercializing their business. The main objective behind this step is to reduce the cost and time that a start-up generally incurs to acquire a patent, thus making it financially viable and providing protection to their innovations, and also encouraging them to innovate further. Some more benefits in IPR like –

• • Applying without having any prior experience and without having a requisite turnover.
  • They can also initialize Money deposits.
  • Will also get access to the information related to any government tenders floated in the market.

2. Fast-tracking of Start-up Patent Applications – The applications for registration of patent will be fast-tracked, to provide for easy and quick realization of the value.
3. Assistance in the filing of IP applications – many facilitators have been appointed, who will assist the entities while filing their applications.
4. Facilitation cost – Under the scheme, the Central Government has proposed to bear the entire fees of the facilitation, of any number of patents, trademarks, or designs of a Start-up.
5. Rebate in filing of application – Start-ups are also provided with an 80% rebate in filing of patents which will help them to save money for crucial formative years.
6. Relaxation in Public Procurement: where the start-up meets the required quality specifications, the government would offer them some relaxation under the Public Procurement policies.
7. Self-certification under Labour and Environment laws: it is generally seen that the laws and taxation policies prove to be very time-consuming and thus act as a barrier to the growth and development of the start-up. However, under this scheme, the government will relax the restrictions on the labor and environment laws to a certain extent.
8. Faster Exits: there is also a provision, under which, the registered start-ups can easily wind up their business, by submitting an application and the same be completed within 90 days.
9. Fund of Funds: The most important and crucial aspect of this scheme is to provide a lot of funds to the start-ups.
10. Tax Exemption: there is certain relaxations in respect of tax recognitions. The following exemption can be availed by a start-up –

Under 80IAC

The eligible start-ups are exempted from paying taxes on the income earned by them, and the same is available for 3 consecutive financial years out of the ten financial years from their incorporation.

Eligibility

• • Any entity recognized by the DPIIT
  • The entity is a Private Limited Companies or Limited Liability Partnerships.
  • The said entity be incorporated as a start-up on or after 1^st April 2016

Registration Process

• • The applicant shall visit the Start-up India portal and register themselves.
  • After successful registration, the applicant shall apply for DPIIT recognition.
  • Getting the recognition, the entity will get access to the Section 80 IAC exemption application
  • Properly fill in all details in the application and upload the supporting documents.
  • Submit the application form along with the requisite documents.

Documents Required

• • MOA and AOA in case of a private limited company and LLP deed in case of limited liability partnership.
  • Board Resolution, stating the approval obtained for such registration.
  • Properly maintained annual accounts of the entity for the last three financial years
  • Duly filled IT returns for the last three financial years

Under Section 56

• • Under this section, any investments made in an eligible start-up, which is a listed company having a net worth of more than Rs 100 Crore or turnover of more than Rs 250 Crore.
  • Investments be made by Accredited Investors, Non-Residents, AIFs (Category I), & listed companies having net worth exceeding Rs 100 crores or turnover exceeding Rs 250 Crores.
  • Such consideration, being received by eligible start-ups, shall be exempt up to an amount of Rs 25 Crores.

      Eligibility

• • An entity should be registered as a private limited company.
  • The said entity be recognized by the DPIIT.
  • Such investment is not made in any specified asset classes.

Registration Process

• • Applicants shall visit the Start-up India portal and register themselves.
  • After successful registration, the applicant shall apply for DPIIT recognition.
  • Getting the recognition, the entity will get access to the Section 56 exemption application
  • Properly fill in all details in the application and upload the supporting documents.
  • Finally submit the application form on the portal, along with the requisite documents.

11. Self-Certification: by introducing the concept of self-certification, many regulatory compliances have been removed and the start-ups could focus on their core business.

Benefits –

• • Start-ups can provide a self-certification regarding the compliance related to 6 Labour Laws and 3 Environmental Laws.
  • In the case of labor laws, an inspection can be undertaken, for a period of 5 years, however, the same can be executed only on receipt of a credible and verifiable complaint of violation.
  • Environment laws, start-ups that fall under the ‘white category’ entity, shall be eligible to self-certify compliance.

Registration Process

• • The entity is required to be on the portal of the Ministry of Labour and Employment, named the “Shram Suvidha Portal”.
  • After registration, the applicant shall log in to the portal and click on the link of a start-up.
  • The applicant can apply for self-certification under the prescribed laws.

Labour laws provided for self-certification

1. 1. • Under the Building and Other Constructions Workers’ (Regulation of Employment & Conditions of Service) Act, 1996
      • The Inter-State Migrant Workmen (Regulation of Employment & Conditions of Service) Act, 1979
      • Under the Payment of Gratuity Act, 1972
      • Contract Labour (Regulation and Abolition) Act, 1970
      • Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
      • The Employees’ State Insurance Act, 1948

Environmental laws provided for self-certification

12. • • The Water (Prevention & Control of Pollution) Act, 1974
      • Water (Prevention & Control of Pollution) Cess (Amendment) Act, 2003
      • Air (Prevention & Control of Pollution) Act, 1981
13. Under the Insolvency and Bankruptcy Code, 2016, start-ups are provided with an easy debt structure, and they can apply for winding up, and the same be completed within 90 days of the filing of an application for insolvency.
14. The Government also seeks to provide certain Pro Bono services, which will be available free of cost. These ate available when the start-ups collaborate with big companies like Amazon and Microsoft.

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