The Startup India Scheme is a flagship initiative by the Government of India aimed at fostering entrepreneurship, innovation, and economic growth. Launched in 2016, this scheme provides startups with financial assistance, tax exemptions, and regulatory benefits to help them scale efficiently. This blog explores the eligibility criteria, benefits, and application process to guide aspiring entrepreneurs on leveraging this initiative for their business growth.
Table of Contents
1. Definition of "Startup"2. What Is the Startup India Scheme?3. Why Was Startup India Launched?4. Top Features Of the Startup India Scheme5. Eligibility Criteria for the Startup India Scheme6. Types of Organisations Eligible For the Startup India Scheme7. How to Register Your Startup with the Startup India Scheme8. Benefits From DPIIT9. Advantages of the Startup India Scheme10. Conclusion11. Frequently Asked QuestionsDefinition of "Startup"
As per the Startup India Scheme, a "Startup" is defined by the following criteria:
The entity should be incorporated as a Private Limited Company, a Limited Liability Partnership (LLP), or a Registered Partnership Firm.
The age of the company should not exceed 10 years from the date of incorporation.
The annual turnover should not exceed INR 100 crore in any of the financial years since incorporation.
The business should be working towards innovation, improvement of products/processes/services, or scalable business models with high potential for employment generation and wealth creation.
Startups should be recognised by the Department for Promotion of Industry and Internal Trade (DPIIT) to avail of scheme benefits.
What Is the Startup India Scheme?
The Startup India Scheme was launched in 2016 with the objective of encouraging entrepreneurship, generating employment, and fostering innovation. This initiative is managed by the Department for Promotion of Industry and Internal Trade (DPIIT) and aims to position India as a global startup hub by offering regulatory support, funding access, and tax exemptions.
Why Was Startup India Launched?
India has always been home to entrepreneurs, but before 2016, starting and scaling a business came with significant roadblocks- complex regulations, limited funding options, and restricted market access. Recognising this, the Government of India launched the Startup India initiative on January 16, 2016, to create a more supportive ecosystem for startups.
Here’s why the initiative was needed and how it helps:
Reducing Bureaucratic Hurdles
Easing Financial Constraints
Encouraging Job Creation & Innovation
Enabling Market Access & Growth
Creating a Culture of Entrepreneurship
Since its launch, over 100,000 startups have been recognised under the scheme, creating jobs, driving innovation, and strengthening India’s position as a global startup hub.
Top Features Of the Startup India Scheme
The Startup India Scheme offers multiple benefits to startups, including:
Tax Exemptions: Startups are eligible for a three-year income tax exemption.
Funding Support: Access to government funds and venture capital assistance.
Simplified Compliance: Reduced regulatory burden with self-certification for labour and environmental laws.
Fast-Tracked Patent Registration: Reduced fees and faster processing for patent applications.
Networking Opportunities: Participation in government-organised startup festivals and events.
Access to Government Tenders: Startups receive preference in public procurement without prior experience requirements.
Eligibility Criteria for the Startup India Scheme
To be eligible, startups must meet specific criteria set by the Department for Promotion of Industry and Internal Trade (DPIIT).
Here’s a detailed breakdown of the eligibility requirements:
Be incorporated as a Private Limited Company, LLP, or a Registered Partnership Firm.
Be less than 10 years old from the date of incorporation.
Have an annual turnover not exceeding INR 100 crore.
Focus on innovation, scalability, and employment generation.
Obtain DPIIT recognition for startup status.
Types of Organisations Eligible For the Startup India Scheme
The following entities qualify for the scheme:
Private Limited Companies: Must be registered under the Companies Act, 2013.
Limited Liability Partnerships (LLPs): Must be registered under the LLP Act, 2008.
Registered Partnership Firms: Must be incorporated under the Indian Partnership Act, 1932.
How to Register Your Startup with the Startup India Scheme
Step 1: Incorporate Your Business
Before applying for Startup India recognition, you must officially register your business as a legal entity. Your startup can be incorporated as one of the following:
Private Limited Company – Register under the Companies Act, 2013 with the Ministry of Corporate Affairs (MCA).
Limited Liability Partnership (LLP) – Register under the Limited Liability Partnership Act, 2008 with the MCA.
Partnership Firm – Register under the Indian Partnership Act, 1932 with the respective state authority.
Step 2: Register Under the Startup India Scheme
Once your business is incorporated, you can apply for recognition under the Startup India initiative by following these steps:
Visit the Startup India portal → www.startupindia.gov.in
Click on "Register" and create an account.
Log in and navigate to “Recognition” → “Apply for DPIIT Recognition”.
Fill in the application form with details about your business.
Step 3: Apply for DPIIT Recognition
To get official recognition as a startup, you must apply for DPIIT (Department for Promotion of Industry and Internal Trade) recognition. DPIIT-recognised startups gain access to tax benefits, easier compliance, and funding opportunities.
Steps to Apply for DPIIT Recognition:
Provide business details (name, incorporation date, industry sector, location).
Describe your startup’s innovation, scalability, and market potential.
Upload supporting documents (explained in Step 5).
Submit the application for review.
Step 4: Recognition Application Submission
Once all details are filled in, submit the Startup India recognition application.
The DPIIT reviews applications to ensure the business meets eligibility criteria (e.g., age of the startup, turnover, and innovation focus). If all documents are in order, recognition is granted within 2-3 weeks.
Step 5: Documents Required for Registration
You must upload specific documents during the registration process. Ensure you have:
Mandatory Documents:
Certificate of Incorporation / Registration – Proof that your business is legally registered.
Detailed Business Description – A document explaining how your startup is innovative and scalable.
PAN (Permanent Account Number) – A copy of your business’s PAN card for tax purposes.
Additional Documents (If Applicable):
Patent or Trademark Details – If your startup has intellectual property rights, submit supporting documents.
Letter of Recommendation (Optional) – From an incubator, industry expert, or recognised institution supporting your innovation.
Step 6: Get Your Recognition Number
Once your application is approved, you will receive a Startup Recognition Number from DPIIT. This confirms that your business is officially recognised under Startup India and is eligible for various benefits.
Step 7: Some Other Important Things To Follow
Ensure compliance with tax laws and regulatory requirements.
Utilise government schemes and incentives to scale operations.
Benefits From DPIIT
Startups recognised under DPIIT receive several benefits, including:
Tax exemptions under Section 80 IAC of the Income Tax Act.
Easier access to government grants and funds.
Self-certification for labour & environmental laws, reducing compliance costs.
Simplified compliance and faster patent approvals.
Gain visibility through Startup India showcases and events.
Advantages of the Startup India Scheme
Financial Support: Grants, loans, and venture capital funding assistance.
Regulatory Benefits: Self-certification for labor and environmental laws.
Tax Relief: Exemption from income tax for 3 years.
Market Access: Access to government tenders and public procurement schemes.
Networking Opportunities: Participation in startup events and mentorship programs.
Conclusion
India is rapidly becoming a global hub for startups, and the Startup India Scheme is at the heart of this transformation. By nurturing innovation, job creation, and economic development, the initiative is shaping the future of entrepreneurship in India.
Frequently Asked Questions
When was the Startup India Scheme launched?
The Startup India Scheme was launched on January 16, 2016, by the Government of India to promote entrepreneurship, innovation, and economic growth.
Who is eligible for the Startup India Scheme?
To be eligible for the Startup India Scheme, a business must:
Be registered as a Private Limited Company, Limited Liability Partnership (LLP), or a Registered Partnership Firm.
Be less than 10 years old from the date of incorporation.
Have an annual turnover not exceeding INR 100 crore in any financial year.
Be working towards innovation, improvement, or development of a scalable business model.
Obtain recognition from the Department for Promotion of Industry and Internal Trade (DPIIT).
Is Startup India Tax-Free?
Startups registered under the Startup India Scheme and recognised by DPIIT are eligible for a three-year income tax exemption under Section 80-IAC of the Income Tax Act. Additionally, they benefit from exemptions on capital gains tax and angel tax under certain conditions.
What are the Startup India benefits?
The key benefits of the Startup India Scheme include:
Tax exemptions: Three-year income tax holiday and angel tax exemption.
Financial support: Access to a ₹10,000 crore Fund of Funds for investment.
Simplified compliance: Self-certification for labour and environmental laws.
Faster patent registration: 80% rebate on patent filing fees with expedited processing.
Networking and mentorship: Opportunities through startup hubs, incubators, and accelerator programs.
How does the Startup India Scheme support new businesses?
The Startup India Scheme supports new businesses by:
Providing financial assistance through government-backed funds and venture capital access.
Offering tax benefits to reduce financial burdens in the early years.
Simplifying regulatory processes, making compliance easier.
Fast-tracking intellectual property rights (IPR) registrations for startups.
Creating networking opportunities through startup events, incubators, and accelerator programs.
Facilitating ease of doing business with relaxed norms and exemptions from various government regulations.
