In India, there are many people who have ideas to run a business, but only some people know how to start a business or modify their perception into a viable venture.
Start-up means a corporation who is new in terms of operations and manufacturing. It is a business with a new inventive idea & with new innovative products and services. The venture or business is a small investment in the size and capital of the operation.
Moreover, it is not that complicated to register a start-up scheme in India. There are many people who are unsure about their business whether they are qualified for a start-up or not.
As a result, this blog will help you in providing the criteria for being categorized as a start-up & startup registration process for schedule your business.
The main objective of startup India is the generation of employment, promotion of startups, & wealth creation. It has proposed various programs for building a robust start-up ecosystem & modify India from the country of job seekers to the country of job creators. Such programs are maintained by the Department for Industrial Policy & Promotion (DPIIT).
In India, startups are growing tremendously. The Government of India led by the Prime Minister Narendra Modi, has established to promote the start-up India initiative and want to inspire entrepreneurs to make more employment in the country. The project of start-up India aims to make a robust ecosystem that boost start-up growth.
For the starting 3 years, a start-up operating under the scheme of start-up India are free from paying taxes. Furthermore, cash obtained from angel investors and incubators are also excluded from taxation.
The 3 years of tax exception signify that a start-up can invest the money. Although, they select and use it to grow their business. Moreover, the government provides tax relaxation on up-front investments that is more than the fair market value.
It is one of the most advantageous favor given to those who are registering under start-up business loan.
2. Acquiring a loan & bank account
Another feature of start-up registration is that it helps in opening a bank account of business & assists entrepreneurs in obtaining a loan from formal resources.
One of the most important assets of a company is a business bank account, which might be shown by displaying legal proof of registration. You can also acquire quick loans from investors or banks as a registered company.
3. Self – certification
In the initial stages of a start-up, business is more accessible to failure. Under the exception of nine labor and circumjacent rules, startups are permitted to self-certify. As a result, for the first 3 years of company formation, the concerned authorities or official cannot conduct any kind of probe.
4. Tenders from the government
The programs of government are based on the probability of evolution along with monetary incentives.
Due to the peak level of competition, most of the companies cannot procure tenders from the government.
Moreover, as a self-certified start-up, companies will be classified higher on the preference list when authorities release the tender.
Registration on the start-up portal can be done only for the following firms: -
Start-up India has changed the process of registration. It has cleared some previous requirements now. Several documents that were required to be filed previously are refused.
The list of documents that are not necessary to be filed at the time of registration are listed below -
The start-up scheme should be registered as -
2. Age criteria for start-up registration
The business should be less than 10 years old.
3. Start-up Innovative idea
There are no particular guidelines for the start-up under this scheme. Even now there are some innovative businesses or schemes and if it is taking some improvement or the development of processes or product.
4. Minimum turnover
The turnover of the business should be a minimum of Rs. 25 crores.
5. Certificate from Department for Industrial Policy and Promotion (DPIIT)
DPIIT has to be acquired by the start-up. The department comes under the Ministry of Commerce & Industry.
6. Minimum time to be a start-up
Basically, an individual that has completed 7 years from the day of its set up is viewed as a start-up. Still, startups such as biotechnology have to complete 10 years from the day of its incorporation.
7. Before approval from DIPP
The business requires to be supported by an angel fund, private equity fund, and incubation fund, etc... These funds should be registered under SEBI.
Step 1 – Incorporate your business
For start-up registration in India, you must register your business first as a partnership firm, private limited company, or limited liability partnership.
You must follow the normal process for the registration of any kind of business such as obtaining a permanent account number, partnership deed or acquiring certificate of incorporation, and meeting other essential requirements.
And also, depending on the scale and nature of your business, you may need legal benefit at the initial stage.
Step 2 – Getting register with startup India program
The next step in the process of start-up registration is to register your company as a new enterprise. The complete process is easy and simple, and you can register online.
Visit the official website of start-up India and click on the register button. Then, enter all the necessary details of the business such as email ID, mobile number, name, password, etc... and attach all the required documents for your startup.
After that, an OTP will be sent to your email address and other details i.e., stage of the start-up and type of user and click ‘submit’ button.
Once your profile has been created on the website, startups can apply for incubator or mentorship programs, various acceleration, and other challenges on the website as well as getting access to resources such as learning and government schemes, development program, & state policies for startups.
Step 3 – Get DPIIT registration
After creating your profile on the website of start-up India, the next step is to get the Department for Promotion of Industry and Internal Trade (DPIIT) recognition.
It helps startups to get the benefits like relaxation in public procurement norms, easy winding of company, access to high-quality intellectual property services & resources, self-certification under environment laws and labors, access to fund of funds, tax exemption on investment above reasonable value, and tax exemption for three consecutive years.
For obtaining DPIIT recognition, access to registered profile with valid log in credentials on the website of start-up India, then click on the DPIIT recognition for startups button under the policies & schemes tab.
After that, click on ‘get recognized’ button. A new page will appear, scroll down the page, and tap on ‘click here for the submission of your application for recognition as a start-up.’
Step 4 – Recognition application
On the form of start-up recognition, you are required to fill in the details like full office address, entity details, authorized representative details, information required, partners or director's details, self-certification, and start-up activities.
Click on ‘+’ sign on the right-hand side of the form & enter every section of the form.
After filling in all the sections of the start-up recognition form. Agree the terms & conditions, and then click on the submit button.
Step 5 – Documents for registration
Step 6 – Get the recognition number
A certificate of recognition will be given once the individual has self-certified & related authority has validated the required documents.
It is compulsory that all the uploaded documents must be valid. If any improper documents id uploaded, then the individual will be fined 50% of the startup's capital or a minimum of Rs. 25,000.
Step 7 – Other areas
Patents, trademarks, or design registration: - If you want a patent for your trademark or innovation for your business, you can easily approach anyone from the list of facilitators provided the government of India. You will be required to bear only legal fees. Therefore, getting 80% reduction in the fees.
Funding: – This is one of the major challenges faced by various startups that have been obtaining finance. Because of the shortfall of experience, existing cash flows, or security, executives fail to attract investors.
In addition, the nature of start-up is high-risk, as a certain percentage fails to lift off and puts off many investors.
To provide financial support, the government of India has built up a fund with an initial corpus of Rs. 2,500 crores & a total corpus of Rs. 10,000 crores over a period of 4 years (Rs. 2500 crores every year).
The nature of fund is ‘fund of funds’, it means that it will not be invested directly into the startups but can participate in the capital of Security and Exchange Board of India (SEBI) registered venture funds.
Self-certification under labor laws and employment: - Start-ups can be self-certified under environmental laws and labor laws so that their compliance overheads are reduced.
It is given to diminish regulatory burden by permitting them to focus on their core business. Start-ups are permitted to self-certify their consent under 6 labor laws & 3 environmental laws for a duration of 3 to 5 years from the day of incorporation.
Units controlling under the industry of 36 white categories as declared on the website of Central Pollution Control Board (CPCB) does not need clearance under the three environmental related acts for three years.
Tax exemption: - Startups are excluded from the income tax for three years. But to get such benefits, they have to be certified by the Inter-Minsterial Board.
The benefits accessible in the start-up registration is given by the Indian government which has been changed overall figure of the startups. It provides the total corpus or funding by the Indian government of Rs. 2,500 crores as the basic funding & Rs. 10,000 crores funding for the upcoming four years.
The startups offer benefits like an exemption firm capital gain tax, an exemption from payment of taxed for 3 years, 80% rebate over fees of the patent.
If we evaluate any start-up registration in India from beginning to the end, it becomes very easy. If you are planning for the registration to incubation support & funding by the government of India & tax exemption, a large amount will be added by the government to increase the economy.
The government aims to help in building a bright future of Make in India by creating ease of doing business in India.
Therefore, you can approach financeseva to avail a loan under start-up India scheme to compare the interest rates and best deal.
What is a start-up loan?
Start-up loans are especially designed for a business owner to fulfill their financial requirements in setting up new business and grow their existing business with the help of financing which will be offered by banks or NBFCs.
What are the benefits of a start-up loan?
Listed below are the benefits of the start-up scheme: -
What are the documents required start-up India scheme?
What is the processing fee charged on a start-up scheme?
The processing fee charged by the start-up scheme ranges from 0.50% to 3.00% on loan amount.