Benefits of STARTUP INDIA REGISTRATION for New Startups

The popularity of Startups and the enthusiasm displayed by entrepreneurs led to the government of India starting and promoting the Startup India initiative. The idea of Startup India is to provide an inclusive platform for the growth of Startups by empowering them through innovation and technology support.

Who can avail the Benefits of Startup India Registration?

•Below are the various Conditions: -

• Is your certificate of incorporation/registration less than 10 years old?
• Are you a private limited company or a registered partnership or a limited liability partnership?
• Has your annual turnover never exceeded ₹100 crore since incorporation or registration?
• Is your business focused on innovation, development or enhancement of products or services or has the potential to generate employment and wealth?
• If the answer is “Yes”, then you are eligible and you should know the various benefits that registration under the Startup India initiative can provide your entity.

However, it must be noted that a new entity created by splitting or reconstructing an existing business will not fall under this category and all conditions have to be met to qualify as a Startup.

•The benefits offered by Startup India registration are as follows: -

• Simple User-friendly process

The process of registering a Startup under the Startup India initiative is very simple. You can do it via the mobile app or use the website. All you need to do is to fill up a simple online form and upload a few documents. The process is completely contactless and paperless and will barely take a few minutes.

• Cost Benefits

Intellectual Property Rights Services are offered at cheaper rates and the response time is also pretty quick. The government bears the facilitator fees while you will bear the statutory fees. You will get up to 80 % discount while filing patents.

• Monetary Assistance

The government has set up a ₹10,000 crore fund to provide monetary assistance to Startups as venture capital. The government offers guarantees to lenders to encourage banks and financial institutions to lend venture capital to these entities.

• Tax Holiday For 3 Years

You can get a 3-year tax holiday if your Startup is incorporated between 1st April, 2016 and 31st March 2022. If you get a certification from Inter-Ministerial Board, you will be eligible for 100% tax rebate on profits for 3 years in a block of 7 years if the annual turnover does not cross ₹25 crores in any financial year.

• Tender Application

You are exempted from prior experience/turnover criteria which are applicable for normal company’s while applying for government tenders which gives you an advantage.

• Simple compliances

Startup compliances are simple to save time and costs. You can self-certify compliances with labour and environment laws via the Startup mobile app.

• LTCG exemption for Startups

The Income Tax Act has included a new section 54 EE for the purpose of exempting tax on long term capital gains to be availed by eligible Startups. To get this benefit, you will have to invest in a fund notified by the Central Government within six months from the date of transfer of the asset. You can make investment in the long-term specified asset up to ₹50 lakh which shall remain invested for 3 years. In case of a premature withdrawal, the benefit will be revoked in the year of withdrawal.

• Choice of Investors

You have the flexibility to choose between venture capitalists and can select your investors.

• Ease of Exit

You can shut down your business within 90 days from the date of the winding-up application.

• Networking Opportunities

Startup fests will be held twice a year at national and global levels to help entrepreneurs to meet and benefit from networking opportunities.

• Additional Privileges

1. Section 54GB has been tweaked to include investment in eligible Startups as a basis for exemption of tax on LTCG from the sale of residential property.
2. Startups are entitled to receive guaranteed funds through the National Credit Guarantee Trust or SIDBI over a span of 4 years.
3. There is no inspection for the first three years regarding labour laws

Authors:

Yash Shah

Associate Consultant | Email: yash.shah@masd.co.in | LinkedIn Profile

Mihir Jain

Associate Consultant | Email: mihir.jain@masd.co.in | LinkedIn Profile