In a growing economy like India, start-ups and small businesses are major growth drivers. However, they face a lot of challenges like a lack of experience, weak cash flows, and an inability to get business loans. To offer them a healthy business environment, the government has launched several schemes. Launched in 2015, the Start-up India scheme aims to nurture entrepreneurs and help them scale their business. Let’s take a look at the scheme and how you can qualify for it.
1. What is Startup India?
The Start-up India scheme falls under the purview Ministry of Commerce and Industry, launched to help entrepreneurs navigate the process of setting up and growing a business. The primary aim of the scheme is to promote start-ups and generate employment. The Start-ups India scheme has launched several programs to build a solid start-ups ecosystem, which are managed by the Department for Industrial Policy and Promotion (DPIIT).
Following the launch of the Start-up India initiative, the Prime Minister Shri Narendra Modi released the Start-up India Action Plan. Following are some benefits that start-ups get as part of the Plan –
- Tax exemption for 3 years
- Discount on patent fee
- Fast-track patent examination
- Tax exemption on capital gains
- A Rs. 10,000 crore fund
- Credit Guarantee mechanism since start-ups face unique funding challenges like a lack of access to business loans and start-up loans
- Research parks and innovation centres
2. How is a Startup Defined?
The scheme defines a start-up as a new entity that has been in existence for less than 10 years. The company must be registered in India under The Companies Act 2013, The Partnership Act 1932, or the Limited Liability Partnership Act, 2002. Companies that deal in technology, intellectual property, software, or new products are characterised as start-ups. However, one-person companies are not eligible.
Additional Read:- Difference Between Start-up and SME Loan
3. Eligibility for the Startup India Action Plan
To qualify for the Start-up India Action plan, a start-up must fulfil the followings conditions –
- The start-up must be incorporated or registered in India for less than 7 years. For biotechnology start-ups, the limit is 10 years
- The annual turnover must not exceed Rs. 25 crores
- The entity must not be formed by the splitting up or reconstruction of an existing business
4. Qualifying for the Startup India Action Plan
To qualify for the Start-up India Action Plan, a start-up must be working towards the innovation, development, or commercialization of a new product, process or service. Technology and intellectual property must be an intricate part of the business. In short, the cause must be a new and innovative one. The registration must be done online by Private Limited Companies, LLPs, or Partnership Firms. The following documents must be submitted with the application:
- Certificate of Incorporation or Registration
- A letter indicating that the entity is involved in an innovative product/service
- A letter indicating that the business is scalable
- Address of the business location and specify the nature of business
- Contact details and PAN of the company
To register for the scheme, visit the online portal of DPIIT or use their mobile app. Once you’ve submitted all documents, you will either receive recognition as a start-up or be rejected. Upon receiving the recognition, a start-up is eligible to avail the benefits of the Action Plan.
Additional Read:- Impact of GST on Startups
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