Benefits of Startup India Recognition: Complete Guide

The Government of India has launched Startup India Scheme in 2016 in order to promote and make the startup ecosystem stronger. This initiative brings multiple job opportunities within the country. The Startup India Scheme is looked after by the Department for Promotion of Industry and Internal Trade (DPIIT) in India. Setting up your startup in India brings numerous benefits in India including no facilitation cost, 3 tax free years, section 56 exemption, no inspection for 5 years and many more.

In this blog, we will discuss in detail about each benefit one can get from Startup India Recognition in India along with what Startup India Recognition and its eligibility criteria. 

What is Startup India Recognition? 

Startup India Recognition is a scheme through which startups can get several benefits including income tax exemption for 3 consecutive years, patent filing, self certification and many more. Startup India Recognition is a business model that aims to meet a marketplace need by developing or offering an innovative product, process or service. Under the StartUp India Action Plan, start-ups that meet the definition as prescribed under the relevant notification are eligible to apply for recognition under the program. Let’s understand this eligibility criteria for Startup India Recognition in detail. 

Startup India Recognition Advantages 

There are numerous benefits entities can get by registering themselves under Startup India Recognition. These benefits are as given below: 

1. Easy Registration: The procedure to register an entity under Startup India Recognition is completely online. Entities need to login to the official Government Website or even can complete the registration through mobile application. The registration can be completed easily by filing a simple form and uploading certain documents. This online procedure helps entities to save their precious time instead of waiting for their turn in offline procedure. Also, it reduces the unnecessary paperwork.
2. Easy Compliance: Startup offers simplified compliances in order to save time and money both. Startups are allowed to self-certify compliance with 6 labour laws and 3 environmental laws through a simple online procedure or even with a startup mobile application.
3. No Inspection for 5 Years:  In case of labour law, no inspection will be conducted for 5 years. The startup will be inspected on the basis of receipt of a credible and verifiable complaint of violation. This receipt will be filed in writing and approved by at least one level senior to the inspecting officer. 
4. Self-Certification for White Category: In case of environment law, startups falling under white category as defined by the Central Pollution Control Board (CPCB) will be allowed to self-certify compliance. It is important to note, only one random check would be carried out in such cases. 
5. Rebate on Patent filing cost: The government allows high quality Intellectual Property Right Services at lower prices helping startups to enjoy 80% rebate in the patent filing cost. Also, the government offers a fast-track examination so that their value can be realised sooner. 
6. No Facilitation cost: Another benefit to startups is there is no facilitation cost, the central government will bear the entire fees of the facilitators for any number of patents, trademarks or designs.
7. 3 Tax-Free Years: Startup India Recognition exempts income tax for 3 years for entities in a few cases under Section 80-IAC of the Income Tax Act. In return, they issue Inter-Ministerial Board (IMB) Certification. 
8. Easy Fund Raise: Startup India Recognition offers an easy fund raise opportunity for entities. The government has set a ₹10,000 crore fund as venture capital. This advantage by the government also built trust among banks and investors to offer loans/funds in startups. 
9. Section 56 Exemption: In case listed companies with net worth more than ₹100 crore or turnover more than ₹250 crore made investments into eligible startups get exemption under Section 56(2) VII B of Income Tax Act. 
10. Tender Opportunities: Startups can apply for Government Tenders irrespective of experience level or turnover criteria. This helps startups to get opportunities at the initial stage. 
11. Attract more Investors: People investing in the venture funds set up by the government get exemption from capital gain resulting in attracting more investors. This helps startups to get more funds. 
12. Government E-Marketplace Listing: Government offers an opportunity for DPIIT recognised startups to register and sell their products on GeM (Government e-Marketplace). This feature offers startups a chance to work on trial orders with the Government. 
13. EMD exemption: DPIIT recognised startups are exempted from submitting Earnest Money Deposit (EMD) or bid security while applying for government tenders. 
14. Easy Windup or Exit: Not only easy registration but also easy windup is offered to startups. Startups can close their business within 90 days from the date of application of winding up. 

Eligibility Criteria for Startup India Recognition 

In order to avail these benefits, companies must meet the Eligibility Criteria for Startup India Recognition. This eligibility criteria is as follows: 

• Business Structure: For Startup Recognition, business structure must be a private limited company, limited liability partnership, opc or a registered partnership. 
• Age Limit: The entity must be incorporated within 10 years but for biotechnology startups it is 15 years.
• Turnover Threshold: For Startup Recognition, the annual turnover must not exceed ₹100 crore in any financial year since its incorporation
• Genuine Entity: The entity must be original and not created through splitting or reconstruction.
• Other Eligibility: There are other points as well that should be kept in mind while applying for Startup India Recognition. Checkout the Eligibility Criteria for Startup India Recognition in detail. 

Conclusion 

Startup India Recognition works as a strategic advantage for new and growing businesses in India. The scheme is designed to reduce early stage challenges and to focus on innovation and growth. This scheme offers numerous benefits from tax exemption, to patent rebates, government tenders access, fund raise and compliance support. This Startup India Scheme offers growth and scale sustainability in a competitive market while reducing regulatory burden and building investor confidence. To register yourself under startup india scheme, it is important to meet the prescribed eligibility criteria and comply with ongoing requirements.Startup India Recognition serves as a strong foundation for long-term success in India’s evolving startup ecosystem, especially for entrepreneurs looking to build, grow and exit startups with ease.