What is a Startup India?
Startup India is a drive to help boom the economy with a focus on three areas:
- Simplification and Handholding.
- Funding Support and Incentives.
- Industry-Academia Partnership and Incubation.
Eligibility for Startup India
Per Startup India guidelines an entity can be recognized as a startup if it fulfills the following criteria:
- An organization should be in existence for less than seven years except for biotechnology startups which can be in existence for the last 10 years from its date of incorporation.
- Annual turnover should not exceed INR. 25 crores in any of the preceding financial years.
- It has to be a new organization and not a makeover of an existing one.
The model of the startup should be based on innovation, development, deployment, or commercialization of new products, processes, or services driven by technology or intellectual property.
An organization that wants to be registered with Startup India should be a private limited company, registered partnership firm, or a limited liability partnership.
Features and benefits of recognizing with Startup India
Recognized Startups are allowed to self-certify compliance for 6 Labour Laws and 3 Environmental Laws through a simple online procedure.
In the case of labor laws, no inspections are conducted for 5 years except if there is a credible and verifiable complaint of violation, filed in writing, and approved by at least one level senior to the inspecting officer and in case of environment laws, startups which fall under the ‘white category’ (as defined by the Central Pollution Control Board (CPCB)) would be able to self-certify compliance and only random checks would be carried out in such cases.
Patent applications filed by startups are fast-tracked for an examination so that their value can be realized sooner.
Recognized Startups are provided an 80% rebate in filing patents vis-a-vis other companies. This will help them pare costs in the crucial formative years
However Eligible startups only can be exempted from paying income tax for 3 consecutive financial years out of their first ten years since incorporation.
Also per the Insolvency and Bankruptcy Code, 2016, startups with simple debt structures, or those meeting certain income specified criteria can be wound up within 90 days of applying for insolvency.
Also, startups get the opportunity to list their product on Government e-Marketplace. Government e-Marketplace (GeM) is an online procurement platform and the largest marketplace for Government Departments to procure products and services.
DPIIT Recognized Startups can register on GeM as sellers and sell their products and services directly to Government entities. This is a great opportunity for startups to work on trial orders with the Government.
To promote startups, the Government has exempted Startups in the manufacturing sector from the criteria of “prior experience/ turnover” without any compromise on the stated quality standards or technical parameters. The Startups will also have to demonstrate the requisite capability to execute the project as per the requirements and should have their manufacturing facility in India
DPIIT recognized startups have also been exempted from submitting Earnest Money Deposit (EMD) or bid security while filling government tenders.
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