Registration of Startup in India: A step by step Guide

Sonal Pruthi

16 Jan, 2021

Startup means a company who is new in terms of manufacturing and operations. It is a venture with a new innovative idea in the market with a new inventive service, product, etc. The venture is small in the capital and size of the operations. The funding is either in the form of venture capital from investors within or outside India. This article describes the process of startup registration.

Startup means a new venture/business which is unique to India or a net inflow of product market or something which is not readily available. The start-up is generally defined as that business that is innovative or new inventive setup or influx of new technology: those companies which may reduce the gap in the market.

 The process of registration for a startup in India is very simple. The Startup India^[1] has come up under the flagship program, called STARTUP-INDIA, 2016, launched on January. The objective was to provide economic development and new wings to the economy. This helps in creating new jobs and employment in the country. The government decided to give as many benefits which reduce the burden on a newly established startup.

Eligibility to be a startup

1. Types of registration of startup Company
   The Startup must be registered as
   • Partnership under the Partnership Act, 1932
   • Limited Liability Partnership, under LLP Act, 2008
   • Private Limited Company, Companies Act 2013
2. Age for startup registration
   The company must be 10 years old or less (age).
3. Minimum Turnover
   The turnover of the company must be at least 25 Crores or less.
4. Startup idea Innovative
   To be a startup, there are no specific guidelines under the scheme. Still, it must be some innovative scheme or business, or it is bringing some development or improvement of product or processes.
5. Certificate from DPIIT
   DPIIT (Department for Promotion of Industry and Internal Trade) Certificate has to be obtained by the Startup. The department is under the Ministry of Commerce and Industry.
6. Minimum Period to be Startup
   Generally an entity that has completed seven years from the date of its incorporation is considered a startup. Still, in the case of startups like biotechnology, it has to complete ten years from the date of its incorporation.
7. Before Approval from DIPP
   The firm needs to be supported by an incubation fund, Angel Fund, Private Equity Fund, etc.; these funds must be registered under SEBI.

Taxation Benefits to startups

1. Tax exemption in 80IAC

A tax benefit is given to the company or LLP, which has been registered on 1st April 2016. The minimum turnover must be at least 25 Crores or less.

2. Certificate for tax exemption
   The approval for tax exemption is given by the inter-ministerial body that is a board of certification.
3. Certificate by DPIIT
   This means a certificate for the working of any startup is given by the DPIIT.
4. Tax exemption to Partnership
   The tax exemption is given to the registered startup partnership.
5. Time Period for the exemption of tax
   The startups are given a time period of minimum 3 years to avail tax exemptions. They can take benefit of tax exemptions for 3 years from the period 7 years. They can choose any 3 years from it.

Startup registration process: step by step

1. Incorporation of Startup:
   This means that Startup will be incorporated as a business, like LLP or Partnership. The normal incorporation will procedure shall be followed. The documents like PAN Card and other compliance requirement have to be fulfilled. The registration must be after 1st January 2016, to be under the scheme of Startup India.
2. Startup Registration in the Startup India Scheme of the government
   The registration form has to be submitted online. There is a simple process of registration. The requisite documents have to be submitted on the website. The entire process is in the online format.
3. Documents to be uploaded for startup registration
   • Check for the status if filed in any journal that is online or offline.
   • Letters from the government that is state or central if supported by them or any incubator recognized by the government.
   • Letter of funding which is not less than 20 percent of equity.
   • Upload certificate of incorporation and including details of your business into it.
4. Availing taxation benefits
   For availing tax benefits, it is crucial for the Startup to take approval from the inter-ministry board.
   They can avail the benefits of IPR after recognition from the DPIIT.
5. Self-certification of documents
   This means that you choose to self certify your startup registration documents that availing tax benefits from the first seven years, your idea is innovative, the business is not the result of splitting, and restructuring, and the turnover is less than 25 Crores etc.
6. Recognition Number and Certificate
   This means that after consideration of the documents provided by the concerned Startup, the DIPP shall provide you with unique recognition number. After scanning all the documents, they shall provide you with a Certificate of Recognition.
7. IPR and Funding
   Being a startup, the government has provided a facility to new startups that it has to pay 80% of the fees in filing for patent applications.
   For funding, the government has provided with the availability of maximum funder the schemes in the Government of India.

Conclusion

The benefits available in the startup registration given by our government have changed the overall picture of the startups. The startups are given the total corpus or funding by the government of India of Rs. 2500 crore as the initial funding and Rs. 10, 000 crore funding for the next four years. The startups are given benefits such an exemption from payment of taxes for three years, an exemption from capital gain tax, 80 percent rebate over fees of the patent.

If we calculate any startup registration in India from start to end, it has become very easy. Looking from registration to incubation support and funding by the government and tax exemptions, a lot has been added by the government to boost the economy. This government initiative is helping in building a bright future of Make in India and stopping brain drain to foreign countries, by creating ease of doing business in India.

Read our article:Startup India Registration Process – The Complete Guide