Startup India Scheme
The Startup India Scheme is an initiative by the government of India aimed at encouraging the development and innovation of products and services and the creation of employment opportunities across the country. One of the goals of the scheme has been simplifying how to register a startup in India by reducing regulatory burdens and allowing them to focus on their core business while keeping compliance costs low and also providing multiple benefits, aside from the massive networking opportunities provided by the bi-annual startup festivals held by the Government of India both domestically and international.
Checklist under the Startup India Scheme
An organisation will be eligible under the scheme if
It is incorporated as a private limited company or registered as a partnership firm or a limited liability partnership in India;
It has been less than ten years from the date of its incorporation/registration;
Its turnover for any of the financial years since incorporation/registration has not exceeded INR 100 Crores;
It should possess a Department of Industrial Policy and Promotion (DIPP) Number;
It is funded by an incubation fund, angel fund, or private equity fund that is registered with the Securities and Exchange Board of India (SEBI);
It has obtained a patron guarantee from the Indian Patent and Trademark Office;
It has a recommendation letter from an incubator;
Capital gain is exempt from income tax;
Process to Register under the Scheme
The most important step is to register the company as one of only three possible types of entities:
Private Limited Company, registered under the Ministry of Corporate Affairs and regulated by the Companies Act, 2013 and the Companies Incorporation Rules, 2014. This type of structure allows directors to be separate from the shareholders and provides limited liability for the shareholders with certain restrictions on ownership.
Partnership Firm, registered under the partnership firm act, is a structure where the founders are subject to a partnership deed with the conditions outlined and registered with the registrar of firms. Under this structure, the partners have unlimited liability, which means they are personally liable for the debts of the business. However, low costs, ease of setting up, and minimal compliance requirements make it the easier option for businesses that are unlikely to take on any debt.
