Benefits of Startup India Registration

Startup India Registration is a crucial initiative by the Government of India designed to encourage entrepreneurship and support startups in India. Registering under this scheme not only provides financial and procedural benefits but also enhances the credibility of a business. It plays a significant role in helping new entrepreneurs scale their ventures with government assistance and establish themselves in a competitive market. The scheme offers numerous advantages such as tax exemptions, access to government tenders, faster patent applications, and much more.

Key Benefits of Startup India Registration

1. Tax Exemption

One of the most attractive features of Startup India Registration is the provision of income tax exemption under Section 80 IAC of the Income Tax Act. Eligible startups can avail of a tax exemption for three consecutive financial years out of the first ten years from the date of incorporation. However, to qualify for this benefit, the following conditions must be met:

• The entity should be either a Private Limited Company or a Limited Liability Partnership (LLP).
• It should have been incorporated between 1st April 2016 and 1st April 2021.

This tax exemption helps startups reduce financial burdens in their initial years, allowing them to reinvest the saved amount into business expansion.

2. Angel Tax Exemption

Another significant benefit is the Angel Tax Exemption. Startups recognized under the Startup India Scheme can receive tax exemption on funds raised through angel investments. However, this exemption is granted only if the total amount of paid-up share capital and share premium does not exceed Rs. 25 Crore after the proposed issue of shares. To avail of this exemption, the entity must meet certain conditions related to investments in specific assets. This provision is especially beneficial for early-stage startups relying on angel investors for funding.

3. Rebate in Trademark and Patent Fees

Startups registered under the scheme can claim substantial rebates on intellectual property rights (IPR) filings:

Trademark Applications: Startups can claim a rebate on government fees while filing for trademarks.

Patent Applications: They can receive up to 80% rebate on patent filing fees, along with fast-track examination procedures. The government also bears the fees of facilitators for any number of patents, trademarks, or designs filed by the startup. As a result, startups only need to pay the statutory fees, reducing the cost of protecting their intellectual property significantly.

4. Self-Certification

Recognized startups can self-certify compliance with six labor laws and three environmental laws for five years from the date of incorporation. This reduces the regulatory burden and minimizes the risks associated with inspections. It also allows startups to focus on business growth without worrying about constant legal compliance checks in the initial stages.

5. Access to Government Tenders

Startups registered under the Department for Promotion of Industry and Internal Trade (DPIIT) recognition scheme can apply for government tenders. The usual requirements, such as prior experience or turnover, are waived for these startups. Additionally, they are exempted from submitting Earnest Money Deposits (EMD) while bidding for government tenders. This makes it easier for startups to participate in large-scale government projects, opening doors to significant business opportunities.

6. Networking and Interaction Opportunities

Networking plays a vital role in business growth. The Startup India Scheme provides startups with a platform to connect with fellow entrepreneurs, industry leaders, investors, and experts through government-organized summits, fests, and networking events. Additionally, startups can register as sellers on the Government e-marketplace (GeM) and sell their products and services directly to various government entities.

7. Fund of Funds for Startups

Funding is a critical component of any startup’s success. Under the Fund of Funds for Startups (FFS) initiative, the government has allocated Rs. 10,000 crore to support startups. The Small Industries Development Bank of India (SIDBI) manages this fund and provides financial assistance to startups through approved implementing agencies. This initiative ensures that startups have access to necessary capital without the burden of high-interest loans.

8. Faster Exit Process

In case a startup needs to shut down, the scheme offers a fast-track exit under the Insolvency and Bankruptcy Code, of 2016. Eligible startups with simple debt structures or those meeting specific income criteria can be wound up within 90 days of applying for insolvency. This provision helps entrepreneurs exit smoothly without being stuck in lengthy legal procedures.

Conclusion

Startup India Registration Certificate offers a wide range of benefits, from tax exemptions and reduced compliance burdens to access to government tenders, funding opportunities, and networking platforms. The scheme is designed to provide a supportive environment for startups, enabling them to grow, innovate, and contribute to India’s economic development. By registering under this initiative, startups gain a competitive edge, helping them thrive in the dynamic business landscape.