Here's a guide on how to get your venture to qualify for Startup India

Startup India, launched in 2016, is the spearhead of significant collaborators who are out to make a difference in the lives of budding entrepreneurs.

Here's a guide on how to get your venture to qualify for Startup India

Saturday July 13, 2019,

15 min Read

startup india

Entrepreneur-friendly schemes like Startup India are the icing on the cake in a growing economy like India. According to a Randstad Workmonitor survey, 83 per cent of the Indian workforce would like to be entrepreneurs.

It goes on to state that "a stable business environment" is one of the main factors that draw enterprising people to set up shop. Stable political and economic factors are ever-attractive to the daring breed of young entrepreneurs.

Add this to the fact that an Indian government scheme for starting new businesses is on the cards, startup movements look even more positive. A show of encouragement at the right time from the presiding authorities is just the shot in the arm needed - and that's what Startup India offers.

The setting and scene for this government startup scheme

The climate was never better for someone with a valuable business idea. Awareness about creating a new business from scratch is at an all-time high. Professionals, industry-experts, government and administrative authorities, and laypersons – just about everyone is informed and generally encouraging of startups.

It is a well-known fact that getting a business off the ground takes a lot of legwork, paperwork, and waiting around to get permissions. The current Prime Minister, who has been a visionary in all matters of business, recognises the need for the government to step in and make the way smoother for enterprising aspirants.

What is Startup India initiative?

India startup benefits

Startup India is the spearhead of significant collaborators who are out to make a difference in the lives of budding entrepreneurs. It was first mentioned by Prime Minister Narendra Modi on August 15, 2015 and was launched the following January. It comes under the Ministry of Commerce and Industry.

What does this mean to the young, educated, ambitious Indian? It means that the government has picked up on the need to help you as you meander through the entire process of setting up your dream business. You get hand-holding as required on the administrative front, funding assistance, and focussed mentorship.

Why is ‘ease-of-doing-business’ so crucial?

Ask any red-blooded youth full of energy and enthusiasm to get their pet project off the ground what their main hurdle is – and they will reply that there are so many officials to meet, a multitude of approvals and licenses to get, and they still get questioned by an authority periodically. This might be a state government body or a smaller local/regional authority standing in the way of getting the operations begun.

Ease-of-doing-business concerns itself with offering simple solutions to regulatory administrative problems that drag on. In general, Startup India benefits include:

  • Gently nudging aside state government policies that restrain the operations of a young business

  • Single-window clearance for enterprising activities which enables cross border business owners to submit documents at a single location.

  • Patent application through the Mobile App

The Department of Promotion of Industry and Internal Trade seeks to simplify the steps for entrepreneurs who wish to pool in foreign investment and obtain land clearances and environmental clearances.

Startup India has no myopic agenda. It is a comprehensively thought-out vision of an ideal ecosystem in which new businesses find the ground fertile to take root and thrive. It is a web of influences and resources brought together to make the entire process of setting up shop easier.

Entrepreneurs who had to run pillar to post to get patents for intellectual property can now simply download an app and register their ideas. This is just one example. Others include getting loans, reduced interest rates, tax benefits, and foreign investment in Indian startups.

How the resources in India back up this mission

Through specialised provisions for practicing strategic business challenges, inputs from scions in the industry, and Startup India scheme benefits, the reigning Prime Minister hopes to fuel economic well-being and growth and also generate employment at all levels.

India, with its burgeoning population of young citizens – more than 50 percent of India’s citizens are under 25 years of age and 65 percent of the population is younger than 35 years of age – well-placed to be of use to the economy.

This would have a domino effect of development in many areas including literacy, employment rates, quality of life, mean income and affluence, and much more.

Startup India

Definition of a startup

Startup India defines a startup as a business that has been newly minted and has been in existence of 10 years or fewer. For most industries, the limit is 7 years of operation from the date of registration in India, whereas for Biotechnology firms it is 10 years.

This company should have been registered in India and have its headquarters in India. Companies registered under The Companies Act 2013, The Partnership Act 1932, or the Limited Liability Partnership Act, 2002 are considered valid candidates for taking advantage of Startup India registration.

Companies which sell products/services centered around technology or intellectual property, companies involved in the development of software or processes, or genesis of new products to monetise solutions are all characterised as startups by startup India.

One-person companies led by solopreneurs are not considered eligible for the Startup India scheme.

The startup cannot have, at any point in its existence, crossed a turnover of Rs 100 crore. An important condition is that it should be a new entity, and not one formed from a split or acquisition, or a restructuring of corporate bodies.

If all the above conditions are fulfilled, then these companies are qualified to take advantage of the Startup India scheme.

Establishing a startup in India

Companies incorporated under The Companies Act 2013, The Partnership Act 1932, or the Limited Liability Partnership Act, 2002, are the base laws on which startups in India are formalised. It is a legal investiture that gives the entity existence on paper. Based on these laws, the business is referred to as ‘a company’, ‘a partnership firm’ or ‘LLP – Limited Liability Partnership’.

tax exemption for startups in india

Most startups begin with two to three people. This makes the division of labour possible. Anyone else brought in is a hired employee, consultant or contractor.

I) Human capital needed:

Notary – helps you with the preparation of documents. Draws up affidavits and performs notary services

Lawyer/legal advisor – is prepared to represent you in a court of law. Keeps tabs on laws and legal action you need to be wary of at each step in the life cycle of the startup

Chartered accountant – a significant contributor to the business plan and concept validation stages. Also weighs in on crucial legalities.

II) Paperwork is needed to register for:

  • Director Identification Number (DIN)
  • Reserving the company’s name and seal
  • Company PAN card
  • Tax Account Number (TAN)
  • Goods and Services Tax (GST)

Registering for all these essentials make up the time-consuming stage of incorporation.

III) A clear, memorable logo

This will give the entity high recall-value. You can get a freelance designer to produce one.

Key points to remember:

  • Shops and establishments must be registered with the Office of the Inspector for the State/Municipal Shops and Establishments Act.
  • The Ministry of Company Affairs handles the incorporation of new entities.

IV) Approaching the Registrar of Companies is a two-part process:

  1. Online processing and
  2. Physically submitting documents
  3. Particulars needed are:
  4. Company’s full name
  5. Consent of all the directors,
  6. Memorandum and Articles of Association

V) Hiring employees

To hire people and delegate roles to them in the office, you also need to register the company for

  1. Employee Provident Fund Office
  2. Medical Insurance

After successful processing, inquiries and background checks, the certificate of incorporation is mailed to the company’s registered office from the Registrar of Companies.

Once the paperwork is done, the actual work towards fulfilling the purpose of the entity is begun. The promoters have to give shape to the products/services through which they hope to fulfil demand and generate revenue.

How to qualify for Startup India scheme?

Startup India is a framework over which an ecosystem for assisting entrepreneurs is built. Existing industry leaders have joined hands in support of this venture and much knowledge is shared. To access this wealth of information and make the most of your business idea, you first have to satisfy all the conditions.

To register for the Startup India scheme, you must first be convinced that the cause you champion is to be an innovative one. Registration is to be done online by Private Limited Companies, LLPs or Partnership Firms.

You need these documents to support your application in order to be recognised by Startup India:

  • Your Certificate of Incorporation or Registration

  • A letter indicating that your business works towards an innovative product/service, or works towards improving an existing service/process

  • A letter indicating that your business is scalable to generate wealth and employment

You also need to provide the address of your business location and specify the nature of business. Contact details and PAN for the company also need to be submitted. Registration for recognition can be done via the online portal of DPIIT or through the Mobile App.

After submitting the documents, you may receive recognition as a startup, or receive a rejection along with reasons.

Only after receiving recognition as a startup can you request for tax exemptions under Section 80-IAC or section 56 (Angel Tax Exemption) of the Income Tax Act. The process to apply for these is similar and can be carried out through the Startup India portal or Mobile App.

Documents to support startup

Benefits through Startup India Action Plan

The benefits of Startup India scheme begin with the fact that they help identify new businesses that have just opened their doors or are about to do so. This way, the operations are streamlined and smoothened for those who are still learning the ropes.

These businesses are in the process of finding out regulatory requirements and rulings and are sworn to follow the law of the land. They generate cash flow that helps strengthen the economy. They produce goods from homegrown raw materials and employ services that assist the other related equipment manufacturers, intermediaries, and purveyors get a fair share of the business. To this end, government initiatives for startups are too alluring to resist.

Just like the Make in India tax benefits encourage procurement and production from within India, the benefits of Startup India scheme make sure a steady supply of entrepreneurial ventures keeps coming. Tax benefits for startups in India are ripe given that three years out of the possible seven years can be a tax holiday.

Make in India benefits for startups are all about expedited processing of tax and intellectual property regimes, offering incentives to Special Economic Zones, and reducing the limitations on foreign investment. Government startup schemes like Startup India simplify these motions further.

Startup India Kit

It brings about the convenience of having the plan of action and milestones listed out. Information is collated in one place so you know how to avail the three-year tax holiday and the best possible ways to re-invest the proceeds to infuse momentum to your budding ideas.

The Startup India Hub offers guidance on choosing an industry, the most favourable government policies that support startups, pro-bono services that you can avail, and support through the phases of filing an IPR.

Information at your fingertips

There are many changes in policy, tax norms and exemptions. It is important for entrepreneurs to know these matters and use their knowledge where relevant. Startup India collates all these under the ‘Notifications’ tab so that you don’t miss out on advantages.

These include ‘Angel tax exemption’ or ‘RBI notification on Foreign Exchange Management for Startups’. Each category of notifications is marked and readily available for download.

Empowerment through certification

Startup India conducts classes on Labour Laws, Environment Laws and more. You are no longer left staring when legalities or acts are being discussed. This will let you evaluate and self-certify your business and not worry about inspections.

A three-year holiday from inspections is possible in the context of Labour Laws — you will learn in detail how as you go through the course content of six of them, and also three Environment Laws.

Also, learn about the Apprenticeship Act and let the learning back up your practical knowledge. No more Compliance worries!

Startup India

Tax exemption for Startups in India

The Department of Industrial Policy and Promotion (DIPP) has constituted a board of representatives for Science and Technology and Biotechnology across Ministries. This board assesses startups for Income Tax Exemption on profits under Section 80-IAC of Income Tax Act.

A DIPP recognised startup can get up to 100 percent deduction on tax for profits made if it is registered as a private limited company or LLP. This provision is valid only on startups incorporated between April 1, 2016 and April 1, 2021.

Under section 56 of the Income Tax Act, a DIPP recognised startup can Angel Tax exemption, provided the share premium and paid-up share capital does not exceed Rs 25 crore.

A ready-reckoner of facilitators for patents and trademarks

Once registered, you have a list of names and contact information ready for all your IPR filing needs. You can check by jurisdiction or by sector and reach out to the individual – thus getting started on the process of protecting your intellectual property.

benefits of startup india

Government funding for startups in India

It’s very well that you know the mood is positive but you’ve got to start somewhere when you’re looking for funding support. Startup India gives you organised current, information about the schemes prevalent in each state and whether a state/regional authority participates in a given scheme. Also crucial is the information provided on how and when funds would be disbursed and where you can look for follow-up information.

These are only some of the many benefits that make Startup India the comprehensive, systematic plan of action that you need. It is the people you meet, the ideas you share, and the overall dynamic of planning and creating something worthwhile.

It needs utmost conviction and the government schemes for startups make the process from drawing the first mock-up to the actual execution a worthy crusade.


The Government of India recognises that the current generations of Indians have innovation and energy spiralling upward to create unprecedented development of wealth and employment as well as creative output.

To channel this enthusiasm and gumption in the direction of homegrown startup businesses that help both individuals and societies prosper, Startup India is an authentic platform. It aims to raise awareness and bring up the efforts made by enterprising individuals.

Foreign companies which have at least one registered office on Indian soil can also register on the Startup India Hub. Foreign stakeholders and investors are welcome to participate in this startup ecosystem.

In short, this is an end-to-end catalyst for new businesses to form and mature with a few hiccups as possible. If in any case, a startup needs to wind up, Startup India can help the process along in 90 days or less.

Startup India invites the brilliant brains operating in the startup landscape to come together and help one another grow. This paves the way for the trend of sophistication and sparkling innovation to keep growing.

It seeks to raise the standard of products, processes, and services created so that the overall quality of innovation stays high and keeps on improving.

Bottom line:

If you’ve got a startup idea or are already building it up (on paper or in brick-and-mortar), your nation is on your side giving you strength. As much as any well-wisher, your motherland would like you to realise your dreams and is ready to back you up in the process.

FAQs on Startup India

When is the best time to register with Startup India?

Soon after getting the incorporation certificate. You need to have an LLP, Private Limited Company or Partnership Firm certificate from the Registrar of Companies to participate in Startup India’s ecosystem.

Do I get to practice my skills?

Yes, your Startup India Hub helps you participate in innovation challenges. These challenges are put together by some of the corporate bodies that you would have admired in the past or through government resources.

Who are the mentors helping the founders of Startup India?

Subject-matter specialists, incubators, professors, facilitators are available in the startup ecosystem put together by Startup India. They help clarify the various stages of the startup life cycle and offer valuable insights into how to go about a certain step.

The first point of contact would be to email [email protected]

How about day-to-day support on small matters? Can Startup India help me there?

Yes. Clarification on policy matters, online support for social media engagement and assistance is offered through a call center.

How does the value offered by Startup India reach me?

It all starts when you download the Startup India Mobile App. You receive helpful alerts, a clear picture of the progress you’ve made and what to do next.

Do I have to pay for the training programmes?

Yes, there would be a fee structure given for the pieces of training and accordingly, you have to make the payments.

Can a foreign company register itself under Startup India?

If the company has at least one office registered in India, it can apply for Startup India scheme.

My venture does not have a PAN card. Is it still possible for me to register my business as a startup?

Yes, it is. But it is always advisable to obtain a PAN card for taxation purposes.

On rejection of an application from an incubator, would I be able to apply to the same incubator or do I need to choose another one?

You can still apply to the same incubator or go to different incubators as well.

(Edited by Saheli Sen Gupta)