Indian Startup Recognition = 4 Step Process

Startup sector in Indian economy is emerging as the most desired flavour of the season, a large number of young entrepreneurs have been efficiently converting their ideas into a profit generation model. Apart from the idealistic innovations and efforts of our budding entrepreneurs, the Government of India has also displayed its ongoing support to the industry.

The Government has launched some mainstream initiatives focused purely on the promoting and developing a sophisticated startup environment in India. Few examples of these initiatives are, #startupindia, Make in India, Atmanirbhar Bharat Abhiyan, new MSME scheme etc.

In this article, we would be more focused on the procedure of getting recognized as a startup in India.

What are the benefits of startup recognition ?

1) Self compliance under 3 environmental and 6 labour laws, and no inspections will be conducted for a period of 3 years in labour laws.

2) Income tax exemption for a period of 3 consecutive years and exemption on capital and investments above Fair Market Value.

3) Easy Winding up of Company (i.e. under 90 days)

4) Fastrack patent application with upto 80% rebate in filings.

5) Exemptions from requirement of earnest money deposits, prior turnover and experience requirements in government tenders.

Who can apply ?

According to the notification issued by the Ministry of Commerce and Industry (Department for promotion  of Industry and Internal Trade), on 19 February 2019, the following entities shall be eligible for availing startup recognition:

• The entity is  incorporated as a Private Limited Company under the Companies Act, 2013 or a Limited Liability Partnership (LLP) under the Limited Liability Partnership Act, 2008 or a Partnership Firm.
• The turnover of the entity should be less than INR 100 crores in any financial year since incorporation.
• The entity shall be considered as startup upto 10 years form the date of incorporation.
• The startup should be working towards innovation, development or improvement of products or processes or services, or should be a scalable business model with high potential of employment generation or wealth creation.

Please note that any entity formed by splitting up or reconstructing an existing business shall not be considered as startup.

How to make application ?

The procedure for getting recognized as startup is quite simple and transparent. The user just need to visit #startupindia portal and make an online application, the detailed procedure of which is explained below :

Step 1 - Register

On reaching the #startupindia portal, the user shall click on the register tab, as shown in the above pic and create an account for his startup.

Once the account is created, the user is required to complete the profile by providing the detailed  information regarding the startup.  

Step 2 - DPIIT Recognition/ Startup Recognition

Upon completing the user profile, the user can easily find the tab for DPIIT/ Startup recognition from the dashboard, and click the tab, as provided in the above picture for filling up the recognition form.

Step 3 - Filling up the Form

The above picture displays the web form for obtaining startup recognition, the user shall fill up each tab separately, providing a detailed preview of the startup business he is undertaking.

It is hereby advised for the user to keep a detailed write up available with him, explaining minute details of the startup such as 

a) What kind of problem the startup is solving ?

b) How does the startup propose to solve that problem ?

c) What is the uniqueness of the solution ?

d) How does the startup generate revenue ?

Apart from the above it is also recommended that the user shall also provide and upload the website link, videos, pitchdeck, patents (if any)  and any other material awards or recognition received, for standing on a better chance of getting recognized.

The user is required to submit the incorporation/ registration certificate of the entity as a mandatory attachment to the application.

After submitting the application with above documents, an approval/ rejection (with reasons and an opportunity for resubmission) is provided within 3-4 days on the registered email id of the user.

Please note that, only 3 attempts are provided to a user to resubmit the application, on failure of which the submission of application is delayed by a period of 3 months.

Step 4 - Startup recognition certificate 

Once the startup is recognized by the DPIIT, the above certificate of recognition is granted to the entity.  This recognition further enables the entity to make the application for tax exemptions under section 80 IAC and section 56 of the Income Tax Act, 1961 and avail all the other benefits as are provided to a startup entity.

This certificate is valid upto 10 years from the date of incorporation or registration of the entity and until the trigger point for turnover i.e. Rs. 100 crore is not hit by the entity.

Disclaimer: The contents of this blog has been prepared keeping in view the latest provisions applicable in the country and due care has been taken to ensure the accuracy, completeness and reliability of the data used in creating this blog. Hence no personal responsibility is assumed therefore.

About the Author

The Author of this blog, CS Krunal Charadva is a Company Secretary having an expertise in setting up of new companies and businesses in the country alongwith a wholesome experience in handling matters relating to the Companies Act, RBI (FEMA), drafting agreements, contracts and other corporate compliances applicable in India.

Still having questions in you mind ?? 

Feel free to share your queries and thoughts at - krunal.charadva@yahoo.com  or just whatsapp/ Text/ Call at +91 9711420229

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