Startup Registration

Startups are becoming very popular day by day. To accelerate Indian economy development and attract much needed talented entrepreneurs, the Government of India, under the leadership of Prime Minister Narendra Modi, has started and promoted Startup India initiative to recognize and promote startups.

A startup is a newly established business, an effort by 1 or a group of individuals. What differentiates it from other new businesses is that a startup offers a new product or service in an innovative way. The keyword is innovation. The business either develops a new product/ service or redevelops a current product/service into a new one.

Certificate Issuing Authority

Startup Recognition Certificate is issued by the Ministry of Commerce and Industry (Department for Promotion of Industry and Internal Trade).

Validity of Startup Registration Certificate

Up to 10 years from the date of incorporation/registration or valid until its turnover in any previous year does not exceed Rs. 100 crores, whichever is earlier.

Criteria to be Fulfilled before Making an Application for Startup

A Company must meet the following criteria to be considered eligible for DPIIT startup recognition

Years of Existence
Period of existence and operations should not be exceeding 10 years from the Date of Incorporation.

Entity Type
Incorporated as a Private Limited Company, a Registered Partnership Firm or a Limited Liability Partnership.

Annual Turnover
Should have an annual turnover not exceeding Rs. 100 Crore for any of the financial years since its Incorporation.

Splitting and Reconstruction Entities not Permitted
Entity should not have been formed by splitting up or reconstructing an already existing business.

Must Depict Innovation and Improvement
Should work towards development or improvement of a product, process or service and/or have scalable business model with high potential for creation of wealth & employment.

Benefits of Startup Registration

Income Tax Exemption
Entities having Startup Registration Certificate will enjoy the Income Tax Exemption for 3 Consecutive years and exemptions on Capital Gains and Investments above Fair Market Value.

IPR Protection and Patent Application
Startup Registered Entities will enjoy the benefit of Fast Track Processing of their applications along with 80 Percent Rebate in Filing Patents.

Easy Winding Up Process
Startups are being provided with additional facility of easy winding up process within 90 days under Insolvency and Bankruptcy Code, 2016.

Easier Public Procurement Norms
Startups can get listed as seller to the Government and can avail benefit from exemptions on EMD.

Self Certification Benefit
One of the most Important benefit is of Self Certification. Self Certification under 3 Environmental and 6 Labour Laws is Permitted.

White Category Recognition
In the case of environment laws, startups which fall under the ‘white category’ (as defined by the Central Pollution Control Board (CPCB)) would be able to self-certify compliance and only random checks would be carried out in such cases.

Labour Laws Benefit
In the case of labour laws, no inspections will be conducted for a period of 5 years. Startups may be inspected only on receipt of credible and verifiable complaint of violation, filed in writing and approved by at least one level senior to the inspecting officer.

Procedure for Startup Registration

  • Step 1: Business Incorporate
    First things first, you need to incorporate your business as a Private Limited Company or a Limited Liability Partnership or a Partnership firm.
  • Step 2: Register under Startup India
    Now registration processes of firm or company as a startup in the Startup India scheme of the government can be initiated. Fill the form available for you on the Startup India website. After filling all the details uploading of a certain number of documents to be done.
  • Step 3: Documents uploaded in a PDF format

    A) Letter of recommendation along with the registration form is required. One can get any one of the following recommendation letters.

    • A recommendation letter from an Incubator known in a post-graduate college in India, in a format approved by the DIPP. This is regarding the innovative nature of the business; OR
    • A recommendation letter from an incubator that the Government of India funds as part of any specified scheme to promote innovation; OR
    • A letter from any of the Incubators, recognized by the Government of India, in DIPP format.
    • A letter of funding not less than 20% in equity, by an Incubation Fund, Private Equity Fund, Angel Fund, Accelerator, Private Equity Fund, registered with SEBI that endorses the innovative nature of business; OR
    • A recommendation later by the Central or any State Government of India; OR
    • A patent filed and published in the Journal of Indian Patent office in areas affiliated with the nature of the business being promoted.

    B) Registration or Incorporation Certificate

    C) Brief description of your business

  • Step 4: Tax Exemptions to be availed to be mentioned
    In India, startups are not required to pay income tax for the first three years but in order to to avail such benefits, the company must be certified by the Inter-Ministerial Board (IMB). This is where companies registered with DIPP get relaxation as the registration is enough to get the benefits.
  • Step 5: Self-certification Allowed
    • You are a Private limited company, an LLP or a partnership firm.
    • Your business must be incorporated or registered in India, not before 5 years.
    • Your company’s turnover must not be more than Rs 100 crore.
    • The company has to keep innovating something new or making the existing system better in its own way.
    • Your business must be a fresh idea and not a splitting up or reconstruction of an existing business.
  • Step 6: Recognition Number Issued
    On application of this registration, you will get a recognition number with immediate effect.
  • Be careful while uploading the data, as any discrepancy in it can cause a huge fine of up to 50% of paid-up capital or Rs 25,000 at the very least.

List of documents required for Startup Registration

For Individuals and
Sole Proprietorship

  • Copy Of The Logo, Preferably In Black & White (Optional). In Case Logo Is Not Provided, The Trademark Application Can Be Filed For The Word.
  • General Power Of Attorney On Stamp Paper Is An Authorization From The Applicant To a Trademark
  • Agent / Attorney For Filing The Trademark Application On His/ Her Behalf.
  • Identity Proof Of The Individual Or Proprietor.
  • Address Proof Of The Individual Or Proprietor.
  • User Affidavit On Stamp Paper Is Trademark Is In Use Before Application.

For Partnership/LLP/Company-Small Enterprise or Startup/Others

  • Copy Of Logo (Optional)
  • Power Of Attorney On Stamp Paper
  • Udyog Aadhar Registration Certificate.
  • Incorporation Certificate Or Partnership Deed.
  • Identity Proof Of Signatory.
  • Address Proof Of Signatory
  • User Affidavit On Stamp Paper Is Trademark Is In Use Before Application.

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Frequently Asked Questions

What is Startup India Hub?

Startup India is a scheme available for every stakeholder in the Startup network to interact amongst one another, exchange knowledge as well as create successful partnerships in a highly dynamic environment.

When an Entity shall cease to be a Startup?

After the completion of 10 years from the date of incorporation or registration.

In case the turnover for any previous year surpasses Rs. 100 crore

Could a Foreign Firm Registered in India entitled for Startup India Registration?

Yes, provided the corporation incorporated in India and fulfil all specified criteria to become eligible for registration.

Validity of Startup Recognition Certificate?

Up to 10 years from the date of incorporation/registration or valid until its turnover in any previous year does not exceed Rs. 100 crores, whichever is earlier.

Whether the Tax Exemption is attached by default will all Startup Recognition?

No. According to the current notification dated 11.04.2018, in order to claim Tax benefit or exemption under the income tax act, one is required to apply separately after getting the startup recognized.