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Startup India Scheme

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For employment and wealth generation, Startup India Scheme was initiated by the government of India. It aims at developing innovation in consumer products, and services and increase the employment rate in the country. On 16th January 2016, the Indian government launched the Startup India Scheme. The main objective of this scheme is to promote innovation, provide financial support to new businesses, and networking opportunities, and simplify the work process. In this article, we will learn more about the Startup India Scheme, its benefits, and eligibility criteria.

Topic in This Article

The main motive of the Startup India Scheme

  1. Simplification of work
  2. Financial aid

Advantages of the Startup India Scheme

  1. Income tax exemption
  2. Ease of Registration
  3. Financial Benefits
  4. Large Networking opportunity
  5. Government Tenders

Eligibility criteria for Startup India Scheme

The registration process for the Startup India Scheme

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Major issues faced by Start-ups

Startup Scheme India

 

Startup India scheme

The main motive of the Startup India Scheme

Some of the factors on which the Startup India Scheme is based are:

1.  Simplification of work

  1. The scheme aims to simplify the work process of new startups to encourage them in their work.
  2. To register for the Startup India scheme smoothly, the government has established vivid Startup India centers. Here all the process related to registration and grievances is carried out.
  3. An online portal and a mobile application are set up to ease the registration process from anywhere and anytime.

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2.  Financial aid

  1. Providing financial aid to young startups will provide a hassle-free kick-start to their new business.
  2. The scheme will provide investments in various start-ups.
  3. Special funds and monetary help in which there is an exemption from income tax on the capital gain.
  4. Income tax will not be taken for the first 3 years after the incorporation.
  5. According to The Income Tax Act, if a Startup (company) receives any consideration for the issue of shares that exceeds the Fair Market Value of the assets, such excess compensation will be taxable in the hands of the recipient as Income from Other Sources which are not mentioned.
  6. Venture capital funds investing in startups do not fall under the application of this provision. The same extends to the investment made by organizations in Startups.

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Advantages of the Startup India Scheme

Listed below are some of the provided benefits

1.      Income tax exemption

Newly approved Startup companies can free themselves from 3 years of income tax payments post the incorporation year by getting a valid certificate from the Inter-Ministerial Board. They can also claim exemption from tax on capital profits if the startup companies had invested money in specified funds.

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2.      Ease of Registration

Under the Startup India Scheme, registration through the online portal and even offline registration by visiting Startup India registration centers have become easy. Registration can be done by completing the formalities related to it during a single meeting itself.

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3.      Financial Benefits

Some of the startups in India are patent-based. Patent-based means that the company manufactures unique goods and no one else has the right to manufacture them except themselves. To register the patents, they suffer from a high-cost fee or have to pay the patent cost.

With the help, the scheme provides up to an 80% decrease in patent costs. Also, patent registration is easy and less time-consuming. The government also pays the facilitator’s fees to assist the company in obtaining a patent.

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4.      Large Networking opportunity

The Startup companies and organization gets an opportunity to increase their network and gain global recognition of the business through that network. One can build a highly strong network to ensure smooth workflow and good professional relationships with partners or collaborators. More than two startup fests are also conducted by the government of India throughout the year, giving new startups a chance to build their network.

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5.      Government Tenders

The startup can seek government tenders easily through this scheme. Also, they are not required to possess any experience. Through government tenders, one can get high payments and large project opportunities.

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Eligibility criteria for Startup India Scheme

The five major eligibility criteria are:

  1. The start-up should be registered as a private company, a private limited company, or a limited liability partnership firm.
  2. The start-up should not be older than 5 years.
  3. The annual turnover of the start-up must not exceed INR 25 crores.
  4. The start-up should not be a business that is already existing or a result of splitting up.
  5. The start-up must be a result of innovation and new product creation.

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The registration process for the Startup India Scheme

Step 1: Register or Log in to the Startup India portal through: https://www.startupindia.gov.in/content/sih/en/registration.html

Step 2: Fill in your legal entities.

Step 3: Enter correct Incorporation/Registration No. and incorporation/Registration Date.

Step 4: Enter your PAN Number (optional).

Step 5: Enter the Correct residential address.

Step 6: Enter details of the authorized representative.

Step 7: Enter the details of the Directors and partners.

Step 8: Upload all essential documents and self-certification in said manner.

Step 9: File the incorporation/Registration certificate of the company.

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Major issues faced by Start-ups

To gain the benefits, there are also some limitations that should be focused on:

  1. Not only thinking about a start-up but executing it is also very important.
  2. The scope of this scheme is short-term in general. It does not focus on its long-term paths.
  3. Any new business needs a competent workforce to succeed. Due to the lack of funds in the early stages of startups, a skilled workforce is impossible.
  4. The risk of failure is higher in start-ups since they tend to work very fast initially.

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The Startup India Scheme is a great initiative led by the government of India to support young start-up organizations and provide them with financial aid. In this article, we covered all the major points needed to look into the Startup India Scheme. The information will surely provide an insight into how the startup can benefit from the scheme.

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