Eligibility, Benefits & Funding Explained

The Startup india Scheme is one of the flagship initiatives by the Government of India designed to boost entrepreneurship and encourage innovation. Launched in 2016 by prime minister Narendra Modi, the scheme aims to create a conducive environment for the growth of startups across India. It provides financial support, tax exemptions, regulatory relief, and access to resources to help entrepreneurs build their businesses from the ground up.

Objective of Startup india Scheme

The primary goal of the Startup india Scheme is to foster entrepreneurship and innovation by providing a framework that supports startups at various stages, from the idea stage to scaling the business. The initiative focuses on promoting job creation, socio-economic development, and technological innovation in the country.

Eligibility Criteria for Startup india Scheme

Not every business is eligible to register under the Startup india Scheme. The eligibility criteria are designed to ensure that only true startups benefit from the scheme’s offerings. Here are the key conditions:

1. Definition of a Startup:

o The startup must be an entity that is new (not older than 10 years).

o The business should be incorporated as a private limited company, partnership firm, or LLP (Limited Liability Partnership).

o The company should be working towards innovation, development, or improvement of a product or service.

o The annual turnover should not exceed ₹100 crore in any financial year.

o The entity should not have been formed by the split or reconstruction of an existing business.

2. Innovation Focus:

o The startup should be working towards innovation, such as developing new products or services that significantly enhance the existing market.

3. Approval Process:

o Businesses must apply and register with the Department for Promotion of industry and Internal Trade (DPIIT) to be eligible for the benefits under the scheme.

Key Benefits of Startup india Scheme

The Startup india Scheme offers a range of benefits to eligible entrepreneurs, aimed at making it easier to launch and grow a business:

1. Tax Benefits:

o Income Tax Exemption: Startups are eligible for a 3-year income tax holiday within the first 7 years of incorporation. This is aimed at reducing the tax burden and helping startups reinvest their earnings into business growth.

o Exemption from capital Gains Tax: If you are selling assets such as property or equity and reinvesting the gains into the startup, you may be exempt from capital gains tax under certain conditions.

o Tax Exemption on Investments: There are exemptions for investments above the fair market value, which is often levied as a tax on angel investors funding startups.

2. Easy Compliance and Regulatory Relief:

o Self-certification: Startups can self-certify compliance with labor and environmental laws, reducing the bureaucratic burden.

o Fewer Inspections: The scheme promotes a compliance-based inspection system rather than a cumbersome inspection-based regime.

o Simplified Patents and Trademarks Process: The government has simplified the process for registering patents, designs, and trademarks, offering startups fast-tracked intellectual property protection.

3. Access to Funding:

o Fund of Funds for Startups (FFS): The government has set up a ₹10,000 crore fund to provide equity funding to startups through various venture capital firms. The fund is aimed at providing capital to startups with high growth potential.

o Seed Funding: There are multiple avenues where startups can raise seed capital from both the government and private investors. The scheme helps connect entrepreneurs with potential investors, venture capitalists, and incubators.

4. Innovation and Incubation Support:

o Startup Hubs: The government has set up startup hubs in various states, providing access to mentorship, networking, and resources to help entrepreneurs scale up their businesses.

o Incubators and Accelerators: The Startup india Scheme partners with a range of incubators and accelerators across india to provide startups with access to office spaces, mentoring, and business support services.

5. Easier Exit:

o The scheme encourages easier exit options for entrepreneurs, allowing businesses to wind up or liquidate more easily. The Process of Exit for startups has been simplified, making it easier to dissolve the business without long, cumbersome processes.

How to Apply for Startup india Scheme?

To register under the Startup india Scheme and avail of its benefits, you need to follow these steps:

1. Register Your Startup with DPIIT:

o Visit the official Startup india website and complete the registration process to receive your DPIIT recognition. This is mandatory for availing tax benefits and other government schemes.

o Provide the necessary documents such as business incorporation details, a description of your business model, and your innovation focus.

2. Apply for Benefits:

o Once registered with DPIIT, you can access various benefits like tax exemptions, funding schemes, and compliance relief.

o You can also apply for government-sponsored incubator programs and seed funding opportunities.

3. Compliance:

o Make sure your startup remains compliant with the DPIIT guidelines to continue availing of the benefits.

Government Support Under Startup india Scheme

The government also offers extensive support for networking and collaboration, and market access:

· Easier access to government tenders: Startups can now bid for government tenders with relaxed criteria.

· National and international Exposure: The government helps startups gain exposure by facilitating participation in international exhibitions, trade fairs, and startup events.

· Mentorship: Successful entrepreneurs and industry experts often provide mentoring and advisory services to new businesses under this initiative.

Conclusion

The Startup india Scheme is an excellent opportunity for budding entrepreneurs who are looking to launch their businesses and scale them with the support of the indian government. By offering a range of financial, legal, and operational benefits, it makes it easier for startups to get off the ground and succeed. From tax exemptions to funding opportunities, the government has made sure that the ecosystem around startups is conducive to fostering innovation and job creation.

If you’re looking to start a new business, now is the perfect time to leverage the Startup india Scheme and take advantage of the government’s support. Make sure to meet the eligibility criteria and take the first step towards building your entrepreneurial journey!

Disclaimer:

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.