The government of India has introduced Startup India. Indian Prime Minister Narendra Modi first announced the campaign on the 15th Day of August 2015. This action plan focused on three areas:
1. Simplification and Handholding.2. Funding Support and Incentives.
3. Industry-Academia Partnership and Incubation.
The Startup India Initiative has rolled out several programs to support entrepreneurs, build a robust startup ecosystem, and transform India into a country of job creators rather than job seekers. These programs are administered by a team of dedicated Startup India, which further reports to the Department for Industrial Policy and Promotion (DPIIT).
Recently Indian Prime Minister announced, “India will celebrate January 16 as ‘National Start-up Day. He coined startups as the “backbone “of India and the engine which will empower the nation’s economic growth in the upcoming 100th years of India’s Independence.
Our Prime Minister Modi said that the current decade is referred to as the “decade of India”. His government will usher in massive changes to strengthen innovation, entrepreneurship and the startup ecosystem.
Pointing out that the number of startups in India had grown to over 60,000 from less than 500 just five years ago, Modi said these ventures are working across nearly 55 industry sectors and are “changing the rules of the game.” I believe the golden era of India’s startups is starting now,” the Prime Minister said as the country is “rapidly moving towards hitting a century of unicorns,” which are the hallmark of self-reliant and self-confident India.
What is Startup?
A startup can be interpreted as a newly established business started by one or a group of individuals. What differentiates it from other new companies is that a startup offers a new product or service that is not being provided elsewhere in the same way. The keyword is innovation. The business either develops a new product/ service or redevelops a current product/service into something better.
Department for Promotion of Industry and Internal Trade (DPIIT) considers an entity as a startup for ten years from incorporation date subject to the fulfilment of the following conditions:
1. The Company should be incorporated as a Private Limited Company, LLP or Partnership firm.
2. The Company is eligible for the various benefits of a Startup up to ten years from the date of incorporation.
3. The Company’s turnover should not exceed One hundred crores for any financial years since incorporation.
4. The eligible Company should work on innovation, development, or improvement of products or services. The Company’s business model should be scalable with a high potential for wealth creation or employment generation.
5. It should be a new entity, i.e., not formed by splitting up or reconstruction of an existing business or by transfer to a new company previously used for any purpose.
The objective of the Scheme
The intention behind this Startup is to promote growth and to help the Indian economy to help to develop and innovate products and services, and at the same to create employment and wealth generation in the country.
Startup Registration Process
An application for the online startup registration can be made to DPIIT to be recognized as a duly recognized Startup. The applicant can be file the application online from the website https://www.startupindia.gov.in/ or the mobile app. The following documents are required for registration:
1. Certificate of incorporation of the Company.
2. Details of the Directors.
3. Proof of concept like website link/pitch deck/Startup video (in case of a validation/ early traction/scaling stage startup).
4. PAN Number.
5. Patent and trademark details (Optional)
6. Write-up on the nature of business highlights incorporating how an entity is working towards development, innovation or improvement of products or processes or services, or its scalability in terms of employment generation or wealth creation. This forms the very basis of rejection or approval of the application and must be detailed.
7. Additional documents providing website link, Startup pitchdeck, details of patents, etc., shall also be attached to support the application.
8. Information on any award received by the entity.
9. Document proof of funding received by the entity, if any.
Benefits of Startup India Scheme
There are various benefits given to the Company who have registered themselves under the Startup Scheme. Following benefits are being given to entrepreneurs establishing startups:
1. 80% rebate in patent cost/ IPR protection.
2. Self-certification of six labour laws and three environmental laws through a simple online procedure. Only those startups eligible for this benefit, those who have recognized themselves under DPIIT within five years of incorporation.
3. Tax exemptions under Income Tax Act.
4. Easy winding-up process (within 90 days).
5. Easier public procurement norms.
Recognition and Benefits for Startups include Tax Benefits also. Once the Startup is recognized and registered by DPIIT, one may avail of the following benefits under Income Tax Act:
A) Corporate Tax Holiday under sec 80-IAC
The deduction under section 80-IAC is available to an ‘eligible startup’ up to 100% profits out of 10 years from 01 April 2021 for any three consecutive years from the date of incorporation.
The following conditions have to be fulfilled to be considered as an “Eligible Startup” for claiming this deduction:
i) It should only be a company or LLP. A partnership firm is not eligible for such exemption.
ii) It is incorporated on or after April 1, 2016, but before April 1, 2021.
iii) Its turnover does not exceed Rs. 25 crores and 100 Crore from 01 April 2021 in any Financial Year since incorporation for which deduction is claimed.
iv) It holds a certificate of eligible business from the Inter-Ministerial Board of Certification (IMB) (by filing Form 1).
B) Relief from Angel Tax u/s 56(2) (vii b)
Eligible startups have to file a duly signed self-declaration only with DPIIT for availing exemption. DPIIT shall transmit these declarations to the Central Board of Direct Taxes (CBDT). The eligibility for availing tax exemption under Section 56:-
* It should have been recognized as a DPIIT.
* It should be a private limited company.
* It has not invested in specified asset classes.
* The Startup should not have invested in immovable property, transport vehicles above Rupees ten Lakh, capital contribution to other entities, Loans and advances, except in the ordinary course of business.
Benefits Availability Matrix:
| Benefits | Company (Private Limited) Regd. as Startup |
LLP (Limited Liability Partnerships) Regd. as Startup |
Partnership Firms(Registered)Regd. as Startup |
| Self Certification (within 5yrs. Of Incorporation) |
Yes | Yes | Yes |
| Start up Patent & IPR Applications |
Yes | Yes | Yes |
| Tax Exemption u/s 80IAC (incorporated after 1st April, 2016) |
Yes | Yes | No |
| Section 56(2) (VIIB) of Income Tax Act |
Yes | No | No |
| Easier Public Procurement Norms (Startups need to be recognized DPIIT) |
Yes | Yes | Yes |
Startup Consultants
Various Startup registration consultants in India can help the companies to get the startup registration. There are the best startup registration consultants in Delhi and other metropolitan cities that can provide potential clients with registration and can assist in availing the various benefits under startup. A good consultant or professional must get early registration under the Startup scheme.
Well Known startups
Some of the well-known Startups are discussed in detail below:
1) Byju’s
Among the startups in India, the education technology company has taken the top spot. The former teacher Byju Raveendran founded the Company in 2008 and is headquartered in Bangalore. The Company launched Byju’s learning app in 2015, which offers personalized learning programmes for classes 1-12. Further, it helps aspirants of competitive exams to prepare for the tests like JEE, IAS etc.
2) Paytm
In 2021, Paytm, one of the leaders in digital payments, was founded by DTU graduate Vijay Shekhar Sharma. Its parent company is One97 Communications Ltd. Paytm has grown in popularity globally, with more than 300 million Indians operating it to pay for various goods and services. The Company has extended into investment and online shopping through Paytm Money and Paytm Mall.
3) Nykaa
Woman entrepreneur Falguni Nayar founded Nykaa in the year 2012. Initially, it was started as an online corporation and afterwards eventually switched to being an omnichannel strategy. Nykaa is a beauty retail company that sells cosmetics commodities online and offline. The Company provides comprehensive content that includes product reviews, beauty how-to videos, expert-written articles, and even an e-beauty magazine.
4) OYO Rooms
OYO Rooms was founded in 2013 whose headquarter is in Gurugram. The Company aggregates budget hotels and guesthouses and runs a virtual hospitality brand in India by making it available for booking online. The Company matches the online demand and the supply of rooms at economical rates in India with online requests. Among the millennial population, it is a preferred way of booking hotels.
5) Urban Company
In 2014, Arun Khaitan, Raghav Chandra, and Abhiraj Singh Bhal founded Urban Company in Gurugram. The Company has made a good impression over the last two years by becoming everyone’s favourite for all home and grooming solutions. During a diverse time of pandemics, the Company offered its services at affordable rates to major Indian cities.
6) Meesho
Delhi IIT graduates ViditAatrey and Sanjeev Barnwal founded Meesho, a social e-commerce company in 2015 whose headquarter is in Bengaluru.It allows individuals and small businesses to start online stores through various social networking platforms.
7) UpGrad
Ronnie Screwvala founded UpGrad, Mayank Kumar, PhalgunKompalli, RavijotChugh in 2015, it is an e-learning platform that offers a platform for upskilling, and its headquarter is in Mumbai. UpGrad claims to have built online programmes in collaboration with top universities and industry partners and calls itself a higher education company.
8) Udaan
Udaan was founded by Amod Malviya, Vaibhav Gupta, Sujeet Kumar in Bengaluru in 2016. It is an internet portal that enables B2B trading for small and medium businesses in India.
9) CRED
Kunal Shah founded CRED in 2018. It is known for its quirky advertisements featuring famous cricketers, and its main feature is reward-based credit card payments. At the same time, it let users make house rent payments and introduced short term credit lines.
10) Unacademy
It is an e-learning start-up founded in 2015 in Bangaluru by Gaurav Munjal, Roman Saini, and Hemesh Singh. The Company has a vast network of around 50,000 registered teachers and mainly focus on courses for multiple tests like UPSC, SSC, CAT, IIT JEE, among many more.
The startup Scheme is a gift to the new talents or small entrepreneurs by the Government of India who has new and innovative ideas and has the capabilities and skills but lacks fund. This Scheme helps generate employment creation or wealth generation and provides unique opportunities to potential entrepreneurs. The Startup offers ample benefits to the companies for ten years from its incorporation
We, at MAG, can assist in:
a) Startup Registration Under the Startup Scheme.
b) We regularly assist in carrying out all the formalities, documentation, representation and coordination with relevant authorities.
c) Assisting and providing consultancy in obtaining benefits under Income Tax Act etc., on behalf of startups.
d) We also take matters of clarifications/relaxations with the concerned Authority.
Frequently Asked Questions
- What kind of business structure should be chosen for Startup?
The most favored business structure for startups is Private Limited companies and LLPs. A Private Limited company is legally acknowledged and generally chosen by investors. However, it has more stringent compliance and may have an increased cost of incorporation.
On the other hand, LLPs have lower incorporation costs and have relaxed compliance than the Private Limited Companies. Further, LLPs have limited liabilities and are equally recognized by investors worldwide.
- Can a foreign Company be registered under Startup India?
A foreign company can be registered under the startup India hub. It has at least one registered office in India since the location preferences are created for Indian states only. However, the government will soon start registrations for stakeholders from the global ecosystem.
- How do I know my registration is complete?
On completion of an application and when the Startup gets recognized, it will receive a system-generated certificate of recognition. The recognized Startup can download the certificate from the Startup India portal.
- What can be done to attract investors to a start-up?
The product should receive healthy engagement and traction to attract investors. The startups must effectively communicate the business idea and the business model’s sustainability to the investor.
