Startup India Registration

Intellectual Property Rights (IPR) Benefits

The Startup India program promises to provide high-quality Intellectual Property resources and facilities. The government offers an 80% rebate on government fees on filing a patent application and a 50% rebate on applying for a Trademark. Also, the patent application of startups is fast-tracked for examination and disposal. It also encourages the Startups to avail the benefits of IPR and commercialize the same.

Relaxation in Public Procurement

All the establishments under the Government of India, the Ministries, Public Departments, and Public Sector Undertakings (PSU) have been asked to relax the norms on the procurement process for Startups. Therefore, the registered Startups can get exemptions on the:-

• prior experience
• prior turnover
• earnest money deposit

In addition, recognized startups can get listed on the Government e-marketplace (Gem portal) and CPPP portals and shall get relevant updates and information regarding the government tenders.

Self-certification under Labour and Environment laws

The government has given an option to the Startups to self-certify their compliance under 6 Labour Laws and 3 environmental laws for a period of 3 to 5 years. Also, the Startups that fall under the ‘white category’ of the Central Pollution Control Board (CPCB) will be able to self-certify compliance with respect to three environmental laws for a period of three years.

Tax Exemption

• The profits and gains derived by an eligible startup from the eligible business may get a 100% exemption for 3 consecutive assessment years out of 10 years from the year of its incorporation. These benefits are provided in order to ensure the growth and development of Startups.
• To avail of these benefits, a Startup must get a Certificate of Eligibility from the Inter-Ministerial Board (IMB).
• Recognized Startups are also exempt from tax under Section 56(2)(viib) of the Income Tax Act when such a Startup receives any consideration for the issue of shares that exceeds the Fair Market Value of such shares. The Startup has to file a duly signed declaration in Form 2 to DPIIT.
• Startups are exempted from tax on long-term capital gain if such long-term capital gain is invested in a fund notified by Central Government. The maximum amount that can be invested is Rs. 50 Lakh.
• Startups are exempted from tax on capital gains arising out of the sale of a residential house or a residential plot of land if the amount of net consideration is invested in a prescribed stake of equity shares of an eligible Startup for utilizing the same for the purchase of a specified asset.

Faster Exits

The government of India has provided the provision of winding up the business of startups within a period of 90 days while it is 180 days for other companies under the Insolvency and Bankruptcy Code 2016 (IBC 2016).

Fund of Funds

The most tricky part of running or starting a Startup is to search for and collect funding. Every other company requires money to make money. Therefore, to provide equity funding support for the development and growth of innovation-driven enterprises, the Government has set aside a corpus fund of INR 10,000 crores managed by SIDBI.

The fund is in the nature of a Fund of Funds, which means that the government participates in the capital of SEBI registered Venture Funds, which invest twice the amount in startups.