Registering a startup in India

Registering a startup in India (under DPIIT – Department for Promotion of Industry and Internal Trade) offers a wide range of government-recognized benefits under the Startup India scheme. Here are the key benefits:

✅ 1. Income Tax Exemption (3 years)

• Eligible startups can apply for 100% tax exemption under Section 80 IAC for any 3 consecutive years out of 10 since incorporation.

• This helps in reinvesting profits back into the business during initial growth years.

Source: 📌 Section 80-IAC Income Tax Exemption Eligibility Criteria

The particular company or LLP must be incorporated after March 31, 2016 and before April 1, 2025.

✅ 2. Angel Tax Exemption

• Exemption under Section 56(2)(viib) (popularly known as Angel Tax).

• Startups receiving investments above fair market value from angel investors or others are exempted from this tax, subject to conditions.

✅ 3. Self-Certification for Compliance

• Startups can self-certify compliance under 6 Labour Laws and 3 Environmental Laws.

• Reduces the regulatory burden in the early stages of the company.

• Reference Notification:

  
  

  Ministry of Labour and Employment Notification No. Z-12025/19/2015-LS-II, dated February 12, 2016

✅ 4. Faster Patent and Trademark Filing

• Access to fast-track and reduced-cost IPR services through the Startup India initiative:

  • 80% rebate on patent filing fees.

  • 50% rebate on trademark filing.

Source A: 📌 1Rule 2(fb) and Rule 7(3) of the Patents Rules, 2003 (as amended).

Also supported by Notification No. G.S.R. 500(E) dated 23 May 2016, issued by the Ministry of Commerce and Industry.

Relevant extract:

“A startup shall be eligible for rebate in filing fees and expedited examination process as per the provisions of the Patents Rules, 2003.”

Source B. 📌 Trademark Filing – 50% Rebate

What it means:DPIIT-recognized startups are eligible for a 50% reduction in trademark filing fees (for individual/startup/small enterprise category).

• Example: Standard fee = ₹9,000 (per class, for company); Startup fee = ₹4,500.

Legal Reference: Rule 2(x) and First Schedule of the Trade Marks Rules, 2017

✅ 5. Easier Public Procurement

• Government e-Marketplace (GeM) registration and relaxation in:

  • Prior experience/turnover.

  • Earnest Money Deposit (EMD) for government tenders.

DPIIT-recognized startups are given preferential access to government procurement opportunities with major relaxations in eligibility criteria and financial requirements under the Startup India initiative.

🌐 A. Government e-Marketplace (GeM) Onboarding

Startups can directly register and list their products/services on the GeM portal (https://gem.gov.in) without the need to have prior experience or turnover, which is otherwise required for normal vendors.

🧾 B. Relaxations in Public Procurement Norms

As per GFR (General Financial Rules), 2017, and related Ministry of Finance/DPIIT instructions, the following relaxations are provided to startups:

1. Exemption from Prior Turnover and Prior Experience

• Startups are exempted from having prior experience or turnover in public tenders.

• However, the product/service quality must meet required standards and technical specifications.

2. Exemption from Earnest Money Deposit (EMD)

• Startups are not required to pay the EMD (Bid Security) while applying for government tenders.

Source : 📌 1. Rule 170(i) of the General Financial Rules (GFR), 2017

"Startups are exempted from bid security and can be considered for procurement on the basis of capability and competence."

Source: Ministry of Finance, Department of Expenditure – General Financial Rules 2017

📌 2. DPIIT Notification dated 11 April 2018

Title: "Public Procurement Policy for Micro and Small Enterprises Order, 2012 – Inclusion of Startups"

“To promote innovation, Startups (as defined by DPIIT) shall be exempted from the criteria of prior turnover and prior experience for public procurement.

✅ 6. Access to Startup India Seed Fund Scheme (SISFS)

• Seed funding support up to ₹20 lakhs (grant) and ₹50 lakhs (convertible debentures/loans) for product development, trials, and commercialization.

• Up to ₹20 Lakhs – As Grant

• For validation of Proof of Concept (PoC), prototype development, or product trials.Disbursed in milestone-based tranches.

Source: 📌 1. Official Gazette Notification

Startup India Seed Fund Scheme – Gazette Notification No. P-24029/9/2020-IPR-DPIIT, dated 21 January 2021

📌 2. SISFS Guidelines Document (Official DPIIT Scheme Document)

Title: “Startup India Seed Fund Scheme – Guidelines”, issued by DPIIT, Date: February 2021

✅ 7. Easy Winding Up

• Startups registered under DPIIT can be wound up within 90 days of applying for exit under the Insolvency and Bankruptcy Code, 2016 (Fast track exit).

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✅ 8. Bonus: GST & Compliance Relief

• While GST registration is mandatory beyond a threshold, startups get easier input tax credit access, and the compliance burden is minimized for DPIIT-registered entities.

✅ Eligibility Criteria for DPIIT Startup Recognition (As per Startup India)

1. Entity Type

The business must be incorporated as one of the following:

• Private Limited Company (under Companies Act, 2013)

• Limited Liability Partnership (LLP) (under LLP Act, 2008)

❌ Sole Proprietorships or Unregistered partnerships are not eligible.

2. Age of the Entity

• The date of incorporation/registration should be less than 10 years old from the date of application for DPIIT recognition.

3. Annual Turnover

• The startup’s annual turnover should not exceed ₹100 crore in any financial year since incorporation.

4. Original Entity

• The entity must not have been formed by splitting up or reconstructing an already existing business.

5. Innovative & Scalable

• The startup should be working towards innovation, development, improvement of products or services, or scalable business model with a high potential for:

  • Employment generation

  • Wealth creation

6. Startup India Portal Application

• Must apply for Startup Recognition on the Startup India portal and get DPIIT certificate.

📄 Documents Required

While applying for DPIIT recognition, the following are typically needed:

1. Certificate of Incorporation/Registration

2. PAN Card of the company

3. Brief description of the business and its innovation

4. Website/Patent

5. Details of funding (if received)