Startup Business Registration in India Under DIPP

Author - Associate Shereen Abdin

Benefits of being a DIPP Recognized Startup 

Exemption from Income Tax

One of the benefits of being DIPP registered startup is that The entity registered under Startup India Scheme can avail exemption from payment of income tax for 3 consecutive years out of the first 10 years from the date of incorporation of the entity. To avail this benefit after getting the recognition the Startup has to separately apply to the IMB Inter-Ministerial Board.

Exemption from Angel Tax

Another benefit of being a DIPP recognized startup is that, Startups are mainly funded through angel investment. But such investment is taxable. To increase the funding for startups, the government has exempted registered startups from the tax levied on angel investment. The tax exemption is granted up to the total amount of paid-up share capital and share premium does not exceed Rs. 25 Crore after the proposed issue of share.

Reduced IPR registration fees

The recognized Startup will be eligible to claim a rebate in Trademark and Patent application fees. Such an entity will be able to claim a 50% rebate in Trademark application fees and an 80% rebate for Patent applications. As well as the patent application will be processed on a fast track basis.

Government Tenders

To apply for government tenders, the applicant must fulfil the criteria specified. It must be such as the requirement of minimum capital or turnover or experience, etc. But if the entity is a Startup then it can apply for specified tenders even it does not fulfil such requirements.

Fund of Funds

The government has set up an establishment called fund of funds which will help startups in availing funds.

Interconnection among startups

The government organizes the Startup fest where all the registered startups can interact with each other. They can exchange information and can create brand value.

Fast track Exit

The registered entity will be processed on a fast track basis for winding up within 90 days from the date of application.

These are some of the benefits of being recognized as a DIPP startup.

Eligibility Criteria for Startup Recognition:

• The Startup should be incorporated as a private limited company or registered as a partnership firm or a limited liability partnership.

• Turnover should be less than INR 100 Crores in any of the previous financial years

• An entity shall be considered as a startup up to 10 years from the date of its incorporation.

• The Startup should be working towards innovation/ improvement of existing products, services and processes and should have the potential to generate employment/ create wealth. An entity formed by splitting up or reconstruction of an existing business shall not be considered a startup.

  How to get a Startup India Registration under DIPP?

  Following are the steps to get DIPP registration for startup:

  • Step 1: Get your business incorporated

  • Step 2: Get your business for the startup registration India scheme.

  • Step 3: Assemble all the documents required to be uploaded online.

  • Step 4: Decide about the benefits you would like to have especially tax benefits.

  • Step 5: Self-certify your document.

An entity shall be considered as a Startup:

• Up to ten years from the date of dipp registration startup, if it is incorporated as a private limited company (as defined in the Companies Act, 2013) or registered as a partnership firm (registered under section 59 of the Partnership Act, 1932) or a limited liability partnership (under the Limited Liability Partnership Act, 2008) in India.

• If the entity is working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation.

• Turnover should be less than INR 100 Crores in any of the previous financial years.

• An entity shall be considered as a startup up to 10 years from the date of its incorporation.

• The Startup should be working towards innovation/ improvement of existing products, services and processes and should have the potential to generate employment/ create wealth.

• An entity formed by splitting up or reconstruction of an existing business shall not be considered a “Startup”.
  
  
  Eligibility Criteria for Startup Recognition

  • The Startup should be incorporated as a private limited company or registered as a partnership firm or a limited liability partnership.

  • Turnover should be less than INR 100 Crores in any of the previous financial years.

  • An entity shall be considered as a startup up to 10 years from the date of its incorporation.

  • The Startup should be working towards innovation/ improvement of existing products, services and processes and should have the potential to generate employment/ create wealth. An entity formed by splitting up or reconstruction of an existing business shall not be considered a “Startup”.

Eligibility Criteria for applying to Income Tax exemption (80IAC)

• The entity should be a recognized Startup.

• Only Private limited or a Limited Liability Partnership is eligible for tax exemption under Section 80IAC.

• The Startup should have been incorporated after 1st April 2016.

Eligibility Criteria for Tax Exemption under Section 56 of the Income Tax Act

• The entity should be a DPIIT recognized Startup.

• The aggregate amount of paid-up share capital and share premium of the Startup after the proposed issue of a share, if any, does not exceed INR 25 Crore.