As we’ve witnessed recently, the Prime Minister of India, Narendra Modi, presented the public of her country with a Startup India Program. Since that happened, a high number of startups were founded and launched.
Naturally, as it is the case with a vast majority of similar programs, business-owners who are registering new startups have a lot of benefits provided by the government. For example, the main benefits offered by the country are tax exemptions. This resulted in a fascinating statistic.
A vast majority of startups were launched by young owners and founders. This is a fact that tells a lot about the number of young people in India with creative minds. Because they didn’t have so much support from the government earlier, this number of startups wasn’t so high until recently.
However, since the start of this government program, people are now braver than they were before and now they are getting into business with much more heart. As it is probably the case in every country in the world, people have some exceptional ideas, but they don’t have any knowledge about starting a company of their own. Also, people usually don’t know anything about registering their company as a startup.
At the same time, a lot of the people don’t have a clue if their business is falling into the startup category. This was the reason we’ve decided to compile an article that will consist of all of the facts important for registering a startup in India.
We will talk about what a startup is, the criteria for registration, and the procedure you need to undergo in order to register a company as a startup.
Naturally, before going into greater detail about the procedure for registering a company, we would like to talk about what startup company criteria for registration really are.
What are Startup Criteria in India?
Now we would like to talk about criteria a business owner has to complete in order for his company to be registered as a startup.
- The company needs to be either a limited liability partnership or a private limited company.
- The company needs to have approval from DIPP, which is short for the Department of Industrial Policy and Promotion.
- When it comes to the time restrictions, you need to be aware that a company will remain a startup during the first ten years. Tax exemptions in India have been lifted from 7 to 10 years after the program was launched.
- All of the data about funding needs to be registered with SEBI.
- The company needs to be funded by a private equity fund, an incubation fund, and an angel fund.
- A business owner needs to have the recommendation letter by an incubation.
- The patron guarantee from the IPT, Indian Patent, and Trademark office is a must.
- The firm needs to have innovative schemes and ideas.
The Procedure for Registering a Startup in India
Now we are going to talk about the procedure for a startup registration in India.
Step #1: Incorporate Your Business
The fits thing that you should do is incorporating your company or firm as a limited liability partnership, private limited company, or a partnership company. Naturally, all of the procedure includes filling up all sorts of forms in order to register your company.
Step #2: Register under Startup India
After you’ve completed the procedure for the Startup registration, which is a part of the startup program in India.
The registration is pretty simple, you only need to fill the form that is available on the site of the Startup India program. Also, it will be required of you to upload a certain number of documents on the website.
Step #3: Documents Needed for Startup India Program
A letter of recommendation and a registration form. There are a few types of recommendation letters that you can fill.
- A letter of recommendation that talks about a scheme that promotes innovation.
- A letter from ant incubator recognized by the Indian Government.
- A letter which says what funding was not less than 20% in equity.
- A letter by the State Government of India or from the Central Government.
- Patent needs to be published in the Journal of India Patent.
Step #4: The Mention of Tax Exemptions if Needed
According to the program proclaimed by the Indian Government, startups are not required to pay an income tax during the first three years. In order to have these tax exemptions, the company needs to be certified by IMB.
Step #5: Self-certification
- Private limited company, a partnership firm, or LLP.
- The company’s turnover needs to be smaller than Rs 100 crore.
- The business registration and incorporation in India needs to be younger than 5 years.
- The business needs to have a fresh idea and not dividing up or the reconstruction of the business idea that has been already founded.
- The company needs to have an innovating way or improving the way that already exists.
Step #6: Getting a Recognition Number
On the application of the registration, you will be provided with a recognition number that will have an immediate effect. You will be provided with the certificate of incorporation or registration after the authority has been through all of the documents that you’ve uploaded on the website.
The thing is, you need to extremely helpful with the uploading of the data. The reason is any kind of discrepancy can cause you to pay a pretty big fine or 50% of paid-up capital. You will have to pay at least Rs 25,000.
The Bottom Line
We’ve provided you with all there is to know about the registration criteria and eligibility for a startup. That way you will enroll your company in the Indian startup program and will be provided with all of the benefits that you can get from the government. We hope that our article was helpful.