Indian Government is committed to create an eco-system for ‘start-up’ to reduced initial struggle for entrepreneurs hence Govt. has announced a Start-Up India Policy in 2016 to create an eco-system covering various benefits to start-ups like concessional cost to form a company, subsidy for patent and trademark cost, get funding, tax benefits etc.
Legaljini team of Company Secretaries and Lawyers can advice and assist entrepreneurs to explore and avail benefits announced by Govt of India. Basic details about Eligibility and Process to be a “Start-Up” is as under:
1) It must be an entity registered/incorporated as :
a. Private Limited Company under the Companies Act, 2013; or
b. Registered Partnership firm under the Indian Partnership Act, 1932; or
c. Limited Liability Partnership under the Limited Liability Partnership Act, 2008.
2) Five years must not have elapsed from the date of incorporation/registration
3) Annual turnover (as defined in the Companies Act, 2013) in any preceding financial year must not exceed Rs. 25 crore.
4) Startup must be working towards innovation, development, deployment or commercialisation of new products, processes or services driven by technology or intellectual property.
5) The Startup must aim to develop and commercialise:
a) a new product or service or process; or
b) a significantly improved existing product or service or process that will create or add value for customers or workflow.
6) The Startup must not merely be engaged in:
developing products or services or processes which do not have potential for commercialisation; or
b. undifferentiated products or services or processes; or
c. products or services or processes with no or limited incremental value for customers or workflow
7) The Startup must not be formed by splitting up, or reconstruction, of a business already in existence.
The Startup has obtained certification from the Inter-Ministerial Board, setup by DIPP to validate the innovative nature of the business, and
a. be supported by a recommendation (with regard to innovative nature of business) , in a format specified by DIPP, from an incubator established in a post-graduate college in India; or
b. be supported by an incubator which is funded (in relation to the project) from GoI as part of any specified scheme to promote innovation; or
c. be supported by a recommendation (with regard to innovative nature of business) , in a format specified by DIPP, from an incubator recognized by GoI; or
d. be funded by an Incubation Fund / Angel Fund / Private Equity Fund / Accelerator / Angel Network duly registered with SEBI* that endorses innovative nature of the business; or
e. be funded by the Government of India as part of any specified scheme to promote innovation; or
f. have a patent granted by the Indian Patent and Trademark Office in areas affiliated with the nature of business being promoted.
Process to set-up a Start Up to avail benefits under policy of Govt of India
A self certification system will be launched
A dedicated web portal and mobile app will be developed
Arrangement of self certificate based compliance
No inspection during the first 3 years
80 percent reduction in the application fee of start up patent
Easy exit policy
Inclusion of Credit Guarantee Fund
Relaxation in Income Tax for first three year
Special Arrangement for Female applicants
Introduction of Atal Innovation Mission. Innovation courses will be started for the students
Following flow chart is specifically applicable for startups seeking tax exemption:
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