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STARTUP INDIA REGISTRATION PROCESS | Company Vakil

This article will tell you all about the process of start-up India registration for your business in India. The government of India has recently officially defined the definition of a start- up and made it clear that the business legal entity and its type which are eligible for the scheme.

Company Vakil provides services related to Gst Registration

Start-up India “Start-up Definition”

Any Legal entity will be identified as a start-up.

  1. Till five years from the incorporation date.
  2. If its turnover in the last five financial years does not exceed 25 crores.
  3. It works to innovate, develop, deploy and market new products, processes or services based on technology and intellectual property.

Points to be remember:-

A company, business or entity is referred to as a start- up if

  • The entity is registered under the Companies Act, 2013
  • It is registered as a partnership firm under section 59 of the Partnership Act, 1932 or
  • Registered as a Limited liability partnership under the Limited Liability Partnership Act, 2002

Note: – Sole Ownership Company is not covered by the Start-up India scheme.

In order to obtain tax benefits, a certificate must be obtained from the Inter- Ministerial Certification Board. The Board is made up of the following:

  1. Joint Secretary, Department of Industrial Policy and Promotion.
  2. Representative of Department of Science and Technology.
  3. Representative of Department of Biotechnology.

 

Points to be remembered: – an entity shall be considered a start- up only if it aims to develop and market – a new product or service or a process or improves significantly on a product or service or a process that adds significant value to customers or workflows.

Therefore, if your start-up is like another Ecommerce Start-up website or IT sector, it does not qualify for the tax benefits because you are not defined as a start-up.

PROCESS TO APPLY FOR STARTUP INDIA SCHEME AND FORM

In the official notification issued by Govt, these start- ups first register their business as a legal entity as a private limited company, limited liability partner, partner company, and then register via a mobile app that is not yet launched or via the DIPP portal. (Department of Industrial Policy and Promotion).

The start-up must submit its application together with any of the following documents:-

  1. A recommendation in a format specified by the DIPP from an incubator established in the country’s post- graduate school.
  2. A letter of support from an incubator funded by a central or state government to promote innovation.
  3. A recommendation in the format specified by the DIPP (in terms of business innovation) from any Central Government recognized incubator.
  4. A letter of financing of not less than 20% in equity by any incubation or angel fund / PE fund / accelerator or angel network duly registered with the Securities and Exchange Board of India, which endorses its innovative nature.
  5. A letter of funding as a part of scheme from the government of the Central or State to promote innovation.
  6. A patent filed and published by the Indian Patent Office in the Journal in areas related to the nature of the business to be promoted.

The plan of action is divided between the following areas:

  • Simplification and Handholding
  • Funding Support and Incentives
  • Industry-Academia Partnership and Incubation.

 

To this initiative, the Government is planning to launch a mobile app to register the start-ups with relevant government agencies. A Mobile App allows you to integrate with the Ministry of Corporate Affairs and the company registrar in order to exchange information and process the application for registration.

The app provides a collaborative platform for various partners in the start-up ecosystem with the participation of a national network of venture funds, incubators, academia, mentors, etc. The application will be available on all leading mobile / smart device platforms from 01 April 2016.

The “Start-up India Hub” will be an important partner in this vibrant ecosystem, which works closely with the central and state governments, helps start- ups to obtain accelerators, consultancy in business structuring, technology evaluation, workshop organization, etc.

Adoption of IPRs

IPRs are also a business strategic tool for start- ups. The following steps are taken:

  • Fast-tracking of Start up patent applications
  • Panel of facilitators to assist in filing of IP applications
  • Government to bear facilitation cost
  • Rebate on filing of application
  • Wind up operations for the Start ups

According to the’ Start-up India: Action Plan,’ the Insolvency and Bankruptcy Bill 2015(‘ IBB’), tabled in December 2015 at Lok Sabha, has provisions for fast track and/or voluntary closure of companies. The bill talks about the appointment of a professional insolvency, the liquidator is responsible for the rapid closure of the business, the sale of assets and the repayment of creditors. This process complies with the concept of limited responsibility

Providing financial support through a fund of INR 10,000 crore

The following are key features of the Fund of Funds:

  • The Fund of funds is managed by a Board of Directors composed of private professionals from industry, academia and successful start- ups.
  • Life Insurance Corporation( LIC) is a co- investor in the Fund of Funds
  • The Fund of Funds shall contribute up to 50% of the daughter fund size indicated.
  • The Fund shall provide assistance to a wide range of sectors such as manufacturing, agriculture, health, education and so on.

Tax Exemptions to Start ups

It is stipulated that an exemption shall be granted to persons with capital gains during the year if such capital gains have been invested in the Fund of Funds recognized by the Government. This gives the investors an incentive. Tax exemptions for start- ups are also granted for a period of three years.

Under the Income Tax Act, 1961, where a start- up (company) receives any consideration for the issuance of shares in excess of the Fair Market Value (FMV) of such shares, such excess consideration shall be taxable in the hands of the recipient as Other Sources. It was proposed that the same be extended to investments made in the start- ups by incubators. The same applies to investments made in the start- ups by incubators.

In order to increase the country’s R&D efforts, the government also decides to set up 31 innovation and entrepreneurship centres at national institutes.

I hope you now understand clearly the Start-up India Scheme and the benefits procedure

For more such articles visit Company Vakil

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