Government facilities for Startups

Startup scheme:

Startup India initiative by Government of India in 2016 holds a pool of resources for the startups. It offers a wide range of enrichment like funding&incentives, Incubation, Tax exemptions, ease of patent applications etc, for a company that is recognized as a startup by DPIIT (Department for Industrial Policy and Promotion)

The ‘Startup’ Criteria:

For a firm/company to be identified by DPIIIT as a startup, the nominal list of criterion are detailed below.

1. Age: The company incorporation should not have done before 10 years

2. Type: Incorporation of the company should be done as a Private Limited Company (or) Registered Partnership Firm (or) a Limited Liability Partnership

3. Annual Turnover: Should not have exceeded Rs. 100 crore in any of the financial years since incorporation

4.Original Entity: The firm should have been formed originally ensuring that it is not just splitting/reconstruction of an already existing business.

5. Innovate cum Scalable: The company should contribute towards development or improvement of a product, process/service and/or should possess a scalable business model. The company should be potent for wealth creation and making employment.

Enrichments from DPIIT:

DPIIT showersstartups enrolling under it with the following nourishments/benefits.

1. SELF CERTIFICATION

2. STARTUP PATENT APPLICATION & IPR APPLICATION

3. TAX EXEMPTION UNDER 80IAC

4. SECTION 56 EXEMPTION

5. EASY WINDING UP OF COMPANY

6. EASIER PUBLIC PROCUREMENT NORMS

1. SELF CERTIFICATION:

Ease of India comes here into the picture as self-certification resembles reducing the regulatory burden on the startups to allow them to concentrate on their core business, also to keep compliance costs low.

Nourishments:

• Simple online procedure is provided for the startups to certify themselves for the compliance of 6 Labour laws and 3 Environmental Laws.
• For labour laws, no inspection will be carried out on the premises for 5 years unless a written complaint of violation is filed and approved by a senior to the inspection officer.
• In case of environmental laws, startups certified as ‘White category’ by the Central Pollution Control Board (CPCB), will be allowed to self-certify compliance and few random inspections will be carried out here and there.

Labour Laws:

• The Building and Other Constructions Workers’ (Regulation of Employment & Conditions of Service) Act, 1996
• The Inter-State Migrant Workmen (Regulation of Employment & Conditions of Service) Act, 1979
• The Payment of Gratuity Act, 1972
• The Contract Labour (Regulation and Abolition) Act, 1970
• The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
• The Employees’ State Insurance Act, 1948

Environment Laws:

• The Water (Prevention & Control of Pollution) Act, 1974
• The Water (Prevention & Control of Pollution) Cess (Amendment) Act, 2003
• The Air (Prevention & Control of Pollution) Act, 1981

Eligibility:

Though the company is termed as a startup if it was incorporated within 10 years, the eligibility for self-certification is granted only startups that are incorporated not before 5 years.

Registration:

The company is asked to register and login the ShramSuvidha Portal of the Ministry of Labour and Employment

After login, Click ‘Is any of your establishment a Startup?’ and follow the instructions

2. STARTUP PATENT APPLICATION & IPR APPLICATION:

Patents are the gold mine of startups as it preserves their innovative ideas and offers a competitive edge over other companies, leading to an increase in the value of the company.

The objective is to bring down the time and cost demanded to obtain a patent, making it financially attainable to protect the innovation and encourage further.

Nourishments:

• Fast-track processing: Patent applications by startups are examined faster to realise them sooner.
• Facilitator Panel to assist IP applications: An effective panel of facilitators deployed by Controller General of Patents, Designs and Trademarks (CGPDTM) will advice filling out Intellectual Property applications along with promoting intellectual property in other countries.
• Only Statutory fees: The startup shall pay only the statutory fees while all other facilitation charges will be born by the government, for any number of patent applications.
• Rebate for filling application: A refund of 80% will be provided in the filing of patents.

Eligibility:

DPIIT recognition is favourable. The criteria are mentioned above.

Registration Process & Documents:

Reach out, facilitators. They will guide according to the sector desired and jurisdiction of the facilitators.

3. TAX EXEMPTION UNDER 80IAC

Eligible startups are exempted from paying tax for 3 consecutive years out of the first ten years of incorporation.

Eligibility:

• DPIIT recognised startup.
• Only Private Limited Companies or Limited Liability Partnerships
• Company incorporation should be done after 1st April 2016.

Registration Process:

• Register on the Startup India Portal
• Apply for DPIIT recognition.
• Access the application form for the Section 80 IAC exemption.
• Fill up the details and upload the below-mentioned documents.
• Submit the application

Documents required:

• Memorandum of Association for Pvt. Ltd. / LLP Deed
• Board Resolution (If Any)
• Annual Accounts of the startup for the last three financial years
• Income Tax Returns for the last three financial years

For the status of your application check the dashboard of the startup India portal.

4. SECTION 56 EXEMPTION:

Nourishments:

The exemption provided under Section 56(2)(VIIB) of Income Tax Act

• Investments into eligible Startups by Accredited Investors, Non-Residents, AIFs (Category I), & listed companies with a net worth more than 100 crores or turnover more than INR 250 Crore, shall be exempt under Section 56(2)(VIIB) of Income Tax Act.
• Exemptions for consideration of shares received by eligible startups up to a limit of INR 25 crores.

Eligibility:

• Private Limited Company.
• DPIIT recognized startup
• No investment in specified asset classes
• No investment in immovable property, transport vehicles above INR 10 Lakhs, Loans and advances, capital contribution to other entities, except in the ordinary course of business

Registration:

• Register on the Startup India Portal.
• Apply for DPIIT recognition.
• Apply for Section 56 Exemption.
• An email will be received fro CBDT within 72 hours.

5. EASY WINDING UP OF COMPANY

Simplifies the process of shutting down or winding up operations to permit entrepreneurs faster reallocation of resources and capital to more productive avenues faster, in case of their capital being stuck in the business failure.

Nourishments:

• According to Insolvency and Bankruptcy Code,2016, a startup can be wound up within 90 days of applying for insolvency(startup should have simple debt structures or meet certain income specified criteria)
• An insolvency professional will be appointed who will take over the company. His duties are liquidation of assets and paying its creditors within six months.
• Upon appointment of the insolvency professional, the liquidator shall be responsible for the swift closure of the business, sale of assets and repayment of creditors following the distribution waterfall set out in the IBC. This process will respect the concept of limited liability.

6. EASIER PUBLIC PROCUREMENT NORMS:

Government bodies and state-owned entities will buy products from private entities through Public Procurement. Government organisations constitute a huge market for startups.

It makes easier participation in the public procurement process and opens up a huge market opportunity

Nourishments:

• Listing product on Government e-Marketplace(GeM):GeM is a huge online marketplace allowing government departments to procure products/services.DPIIT recognized startups are allowed to register as a seller in GeM and sell their products/services to the government.
• Exemption from Prior Experience/Turnover: In the context of promoting startups, the government will exempt startups to have prior experience/turnover, without any compromise on the quality.
• EMD Exemption: DPIIT recognised startups will be exempted from submitting Earnest Money Deposit(EMD) or bid security while filing government orders.

Eligibility:

Recognition under the department for Promotion of Industry & Internal Trade.

Apart from these provisions for startup offered by the Government of India, the Startup India website also offers many benefits such as investor relation, incubators, idea brainstorming, market research reports etc.

To get a detailed and FREE consultation, and to get your idea transformed into a successful business with ease, opt-in to schedule your appointment