Startups are a 21st-century rediscovery that has transformed the corporate sector in recent years. While we may be aware of the numerous advantages associated with it, the more pressing concern is if we know how to establish a startup in India. Startups are concentrated pools of creativity and efficiency. They are usually owned by a single founder or a group of founders who are ready to expand their small enterprises.

It may appear that registering a startup in India is difficult, but it is not. The Startup India scheme was introduced by the Indian government to stimulate and relax compliance requirements for startups.

Benefits of startup registration
 

Easy process

The government has introduced a website and a mobile application for the registration process of startups. Anybody who wants to register a startup can fill up the form that is on the website. The process is completely free.

Cost reduction

The government also provides a list of patent and trademark facilitators. They will offer high-quality Intellectual Property Rights services, including patent examinations that are done quickly and at a cheaper cost. The government will cover all facilitator fees, leaving just the statutory fees to the startup. They will save 80% on the cost of submitting patents.

Easy access to fund

The government has established a fund of 10,000 crore rupees to provide venture financing to companies. In order to encourage banks and other financial institutions to provide venture capital, the government is also issuing guarantees to lenders.

Entrepreneurs meetup

The government has proposed to hold 2 startup fests annually both nationally and internationally to enable the various stakeholders of a startup to meet. This will provide huge networking opportunities. Startups are being highly encouraged by the government. The benefits enjoyed by them are immense, which is why more people are setting up startups.

The Eligibility criteria of a Startup Registration

The Indian government has established certain criteria for an organisation to be classified as a startup. Under the Startup India Scheme, the Department of Industrial Policy and Promotion ("DIPP") must identify a firm as a "Startup." The following eligibility criteria must be completed in order to obtain DIPP approval:

Company age 

From the date of incorporation, the company's existence and operations should not exceed ten years.

3 types of Startups can be registered in India:

• Startup as a Private Limited Company Registration
• A Registered Partnership Firm or 
• A Limited Liability Partnership

Annual Turnover 

Should not have had an annual turnover of more than Rs. 100 crore in any of the fiscal years after incorporation.

Original Entity

An entity should not have been created by dividing or reconstructing an existing firm.

Innovative and scalable

Should work on developing or improving a product, method, or service, and/or have a scalable business model with a high potential for income and employment generation.

Startup Recognition 

Under the Startup India Action Plan, startups that meet the definition as prescribed under G.S.R. notification 127 (E) are eligible to apply for recognition under the program. The Startups have to provide support documents, at the time of application. 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".

80 IAC tax Exemption

A startup may opt for tax exemption under section 80 IAC of the Income Tax Act after receiving recognition. After receiving tax exemption approval, the startup can take advantage of a three-year tax holiday throughout its first 10 years of operation.

Criteria for applying for the 80IAC (Income Tax Exemption):

• The company should be a well-known startup.
• Section 80 IAC only applies to private limited companies or limited liability partnerships.
• The startup must have been formed after April 1, 2016.
• Details can be found in the accompanying notification.

Startup India: Tax Exemption under Section 56 of the Income Tax Act (Angel Tax)

Post getting recognition a Startup may apply for Angel Tax Exemption.

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.

Conclusion

We live in a period when entrepreneurship and innovations are rewarded. These facts are supported by the Indian government's recognition and incentives for startups. When a startup is registered, it receives environmental and labour law compliance benefits. Startups benefit from capital gains and investment tax exemptions. Startup registration also aids in the closure of firms within a ninety-day period. Startups also benefit from an 80% discount on patent filings and a plethora of investment alternatives.