Startup

Registration of Start-ups under DPIIT: Eligibility and Benefits

Registration of Start-ups under DPIIT: Eligibility and Benefits

Under the Start-up India Initiative, those companies that fulfil the eligibility can be recognized as start-ups by the Department for Promotion of Industry & Internal Trade (DPIIT). This article specifies the registration applicable to start-ups and its eligibility criteria. You will also find the details and documents required for Registration of start-ups under DPIIT.

DPIIT Start-up India Recognition

Here is a piece of brief information on the DPIIT Start-up India Recognition:

  • The Indian government introduced the concept of Eligible start-up under its flagship programme Start-up India;
  • After that, a formal national policy framework was launched in the month of February 2016 named as Start-up India action plan;
  • DPIIT has defined the criteria for eligible start-up;
  • These eligible start-ups are eligible to benefits by government under different programmes and schemes;
  • A start-up can get recognition just by making an online application on the website- www.startupindia.gov.in

Registration of start-ups under DPIIT: Eligibility Criteria

The eligibility criteria is as follows:

  • Types of entities

Incorporated as Private Limited Company, Registered Partnership Firm or an LLP (Limited Liability Partnership).

  • Criteria for incorporation

It should not be older than 10 years from the incorporation/registration date.

  • Turnover

Annual turnover not more than 100 crore rupees for any of the financial year since the incorporation/registration.

  • Scope of work

It must be working towards innovation, development or improvement of a product, process or service and or scalable business model with massive potential for employment generation or creation of wealth.

  • No splitting or Reconstructing
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The entity shouldn’t be formed by splitting up or reconstructing an already extant business.

What are the details required for Registration?

The following details are required for registration:

  • Details regarding the company/partnership firm/LLP
    • Name;
    • Industry;
    • Categories;
    • PAN;
    • Address;
    • Partners/Directors Details.
  • Number of employees
  • Stage of the start-up
  • If your start-up is creating innovative product/service/process or improving existing product/service
  • Proof of funding if the start-up is receiving funding
  • Details regarding the activities of the start-up including details regarding how the start-up is working towards innovation and scalability in terms of employment generation or wealth creation
  • Credentials of the founders/management
  • Screenshot of product/website link
  • Copy of the Incorporation/Registration Certificate
  • Document of any awards or recognition received by the entity.

It may be noted that in case the ministry finds the document uploaded to be forged, then the applicant would be required to pay penalty.

What are the benefits of registration of start-ups with DPIIT?

To avail benefits, an entity should be set up by the DPIIT as a start-up.

Start-ups are permitted to self-certify their compliance with 6 labour laws and 3 environment laws. It is permitted for 5 years from the incorporation or registration date of the entity. Start-ups are also provided with tax exemptions.

What are the benefits of registration of start-ups with DPIIT?
  • Exemption under Section 56 (2) (vii) (b) of the Income Tax Act 1961

The exemption available to a start-up is the levy of tax on excess consideration. The exemption is beneficial at the stage of an angel/VC round where the angel or VC invests in the excess of fair market value.

  • Exemption under Section 80-IAC
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A registered start-up may avail exemption from income tax payment for 3 years out of the first 10 years from the incorporation date.

  • Exemption under Section 54 (GB)

Section 54GB pertains to tax on LTCG received on the sale of residential property of an individual. The exemption is provided to individuals from payment of tax if the long term capital is invested in a registered start-up.

  • Relaxation in public procurement norms

Public procurement means the process through which the government and state owned enterprises buy goods and services from the private sector. So in order to permit start-ups to participate in public procurement, the eligibility conditions of prior turnover and security cover for projects are exempted as per the goods or services.

  • Start-up patent application

The start-ups recognized by the DPIIT will be required to pay only 80% fee on patents, copyrights, designs, trademark. Moreover, fast tracking of the patent application is also available for start-ups recognised by DPIIT.

  • Funds of Fund

Start-ups recognised by DPIIT are eligible for getting ads 10000 crore funds of fund from AIF.

  • Wind up easily

Start-ups recognised by DPIIT can also be wound up in less than 90 days of applying for insolvency.

Conclusion

Under Start-up India initiative, eligible companies can get recognized as start-ups by the DPIIT and get access to a host of benefits from tax exemption to IPR fast tracking and more. If your entity satisfies the eligibility criteria for registration of start-ups under DPIIT, then consider applying for registration.

Read our article: All about Start-up India Seed Fund Scheme

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