STARTUP INDIA CERTIFICATION
Startup India Certification
Startup India is a government program launched in 2016 by the Government of India to acknowledge and support newly established companies as startups.
Once a startup obtains the Startup India certificate, it becomes eligible for several benefits in relation to intellectual property rights (IPR) applications, such as trademark registration, patent filing, and copyright registration. Recognized startups can take advantage of the following IPR reliefs: expedited processing of patent applications through a fast-track system and a substantial 80% rebate on government fees associated with patent filings.
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What is the Startup India Initiative?
The Startup India Initiative, launched on January 16, 2016, is a prominent program led by the Government of India. Its primary objective is to foster a thriving startup culture and establish an inclusive ecosystem for innovation and entrepreneurship in the country. This initiative encompasses a range of programs aimed at supporting entrepreneurs, cultivating a robust startup ecosystem, and transforming India into a nation where individuals create jobs rather than solely seek employment. The dedicated Startup India Team, operating under the Department for Industrial Policy and Promotion (DPIIT), manages these programs.
To be eligible for the Startup India certificate, a startup must be registered as a Private Limited Company under the Indian Companies Act, 2013, a Limited Liability Partnership (LLP) under the Indian Limited Liability Partnership Act, 2008, or a partnership firm under the Indian Partnership Act, 1932.
There are certain entities that do not qualify for recognition under the Startup India Initiative. These include sole proprietorships, firms established through a notary partnership deed, companies with an annual turnover exceeding INR 100 crores, and companies operating for more than 10 years.
STARTUP INDIA CERTIFICATE BENEFITS
The Startup India Seed Fund Scheme is an initiative introduced by the central government to foster entrepreneurship across India.
At the early stages of enterprise growth, access to capital is crucial for entrepreneurs. Typically, funding from angel investors and venture capital firms becomes available only after the proof of concept has been demonstrated. Similarly, banks usually provide loans only to applicants with tangible assets. Thus, there is a need to provide seed funding to startups with innovative ideas to conduct proof of concept trials.
The Startup India Seed Fund Scheme (SISFS) aims to provide financial assistance to startups for activities such as proof of concept, prototype development, product trials, market entry, and commercialization. This support enables startups to progress to a stage where they can attract investments from angel investors, venture capitalists, or obtain loans from commercial banks or financial institutions.
To be eligible for the scheme, a startup must be recognized by the Department for Promotion of Industry and Internal Trade (DPIIT) and incorporated no more than two years prior to the application. The startup should have a business idea with a viable market fit, potential for commercialization, and scalability. Utilizing technology in the core product, service, business model, distribution model, or methodology to address the targeted problem is preferred. Startups creating innovative solutions in sectors such as social impact, waste management, water management, financial inclusion, education, agriculture, healthcare, energy, mobility, defense, space, railways, oil and gas, textiles, etc., receive preference.
Startups applying for the scheme should not have received more than Rs 10 lakh of monetary support under any other Central or State Government scheme, excluding prizes from competitions and grand challenges, subsidized working space, founder monthly allowance, access to labs, or prototyping facilities. The Indian promoters of the startup must hold at least 51% shareholding at the time of application to the incubator for the scheme, as per the Companies Act, 2013, and SEBI (ICDR) Regulations, 2018. A startup applicant can avail seed support in the form of grants and debt/convertible debentures once, according to the scheme guidelines.
The Government e-Marketplace (GeM) is an e-commerce portal for public procurement where private sellers, including startups, can sell products and services to government buyers and participate in government e-tenders.
By registering as a seller on the GeM portal, startups enjoy certain privileges over other private sellers. The GeM Startup Runway Scheme provides exemptions in various aspects, including prior turnover, prior experience, earnest money deposit, and minimum criteria for government tenders.
After receiving recognition under the Startup India scheme, startups can apply for tax exemption under Section 80 IAC of the Income Tax Act. This allows eligible startups to avail of a tax holiday for three successive financial years during their first ten years of startup eligibility.
Criteria for applying to the 80IAC Tax Exemption include being a recognized startup, being a private limited company or LLP, and being incorporated on or after April 1, 2016.
Upon registration under the Startup India initiative, startups can apply for Angel Tax Exemption. The criteria for Angel Tax Exemption under Section 56 of the Income Tax Act, 1961, include being a DPIIT recognized startup and having an aggregate amount of paid-up share capital and share premium, after the proposed issue of shares, not exceeding INR 25 Crore.
Startups can self-assess labor law compliance during the first three years, without inspection or physical visits by public officers.