Startup India is an initiative of the Government of India, to drive sustainable economic growth
and generate large scale employment opportunities. The Government through this initiative
aims to empower startups to grow through innovation and design.
Meaning of Startup:
A startup is a company founded by one or more entrepreneurs to develop a product or service
for which they believe there is demand. A startup is a company that’s in the initial stages of
Eligibility for Startup India:
For availing various benefits under the Startup India scheme, an entity would be required to be
recognized by DIPP as a startup. Here are the conditions to be fulfilled by startup:
1.If it is incorporated as a private limited company or registered as a partnership firm or a
limited liability partnership in India
2. Up to ten years from the date of its incorporation/registration
3. Has an annual turnover that is not more than Rs. 100 crores during any of the financial
years since incorporation/registration.
4. Is working towards innovation, development or improvement of products or processes or
services, or if it is a scalable business model with a high potential of employment
generation or wealth creation.
5. It is not formed by splitting up or reconstructing a business already in existence.
Cease to exist as a Startup:
1. Once it completes ten years from the date of its incorporation/registration or
2. If its turnover for any of the previous financial years exceeds Rs. 100 crores.
Tax Exemptions allowed under Startup India Program:
Tax benefits provided to recognize startups under the Startup India initiative are:
1. Exemption under Sec 80 IAC: The Startup can avail tax holiday (100% deduction from
profit derived) for 3 consecutive financial years out of its first ten years since
incorporation subject to conditions.
2. Exemption under Section 56: Under the Income Tax Act, where a Startup (company)
receives any consideration for issue of shares which exceeds the Fair Market Value of
the shares, such excess consideration is taxable in the hands of the recipient as Income
from Other Sources. However, Investment by venture capital funds and Venture Capital
Company in Startups and by a company as notified by Central government are
exempted from the application of this provision.
3. Relaxation in Carry forward and Set off of losses under section 79: Loss incurred in
any of the year is not allowed to be carry forward and setoff unless not less than 51% of
shareholding remain unchanged. However, there is relaxation for the eligible startups
referred under Section 80-IAC.
4. Deferment of tax under ESOPS: If the employer is an eligible start-up, fulfilling the
conditions prescribed under section 80-IAC, the tax shall not be payable or deductible on
the perquisite arising from ESOPs in the year of allotment of shares. The employer shall
be liable for deduction or payment of tax within 14 days from the earliest of the following
From the expiry of 48 months from the end of the assessment year in which
shares are allotted under ESOP Scheme;
From the date on which assesses ceases to be the employee of the organization;
From the date of sale of shares allotted under ESOP.
Tax is required to be deducted or paid at the rates applicable during the year of
allotment or transfer of shares by the employer.
Other Benefits allowed under Startup India Program:
1. Self-Certification: The entity will be allowed to self-certify compliance under 3
Environmental Laws and 6 Labor Laws. No inspection will be conducted for a period of
2. Easy winding up of Company: According to the Insolvency and Bankruptcy Code,
2016, the company can be wound up within 90 days of applying for insolvency.
3. Patent Application: The fast-tracking of a patent application will be available for The
DPIIT recognized startups and rebate upto 80% of the total value of the patent fee is
4. Public Procurement Norms: DPIIT recognized startups are entitled to get exemption in
Earnest Money Deposit and from Prior Experience/Turnover requirements.
5. Funds of Funds: DPIIT has targeted to release Rs.10,000 crore for Startups
through SEBI registered Alternative Investment Funds (AIF) for the scheme, fund of
funds for startups.
Registration under Startup India Program:
The entire process of Registration is simple and online. Firstly log on to the Startup India
website and fill-up the form with details of business like, startup as the type of user, name
and stage of the startup etc. After entering these details, the Startup India profile is created.
The benefits of Startup India are numerous. With little compliance and a lot of opportunities we
can start our business.
If you want to apply Startup India click here : https://legalvidur.com/startup-india-registration/