DPIIT Recognition for Startups - Goyal Mangal & Company

In the dynamic landscape of business, where innovation and disruption are the driving forces of success, start-ups in India emerge as the trailblazers of change. These small but mighty enterprises represent the beating heart of the global economy, injecting fresh ideas, creativity and resilience into business ecosystem. These entrepreneurial ventures embody the spirit of risk-taking, often stepping into uncharted territories to solve problems, address market gaps, and redefine industries. The Department for Promotion of Industry and Internal Trade ( DPIIT Recognition for Startups), plays significant role in help evolve the start-ups. In this article, we will delve into major start-up India schemes, their registration, DPIIT Recognition for Startups.

What is a Start-up?

An entity shall be considered as start-up if:

Upto a period of ten years from the date of incorporation/ registration it is incorporated as private limited company or a partnership firm or limited liability partnership.
Turnover of the entity for any of the financial year since incorporation/registration has not exceeded one hundred crore rupees.
Entity is working towards innovation, development or improvement of products or processes or services.
Provided that an entity formed by splitting up or reconstruction of an existing business shall not be considered a ‘Startup’.

Start-up India Initiative was launched by the Government of India in 2016 with the objective of supporting entrepreneurs, building a robust start-up ecosystem and transforming India into a country of job creators instead of job seekers. These programs are managed by a dedicated Start-up India Team, which reports to the Department for Industrial Policy and Promotion (DPIIT)

The DPIIT based on their eligibility makes the start-ups undergo the recognition and registration process every year and finalizes a DPIIT recognized start-up list. Around 119537 start-ups have been recognized by DPIIT till now. Some of them are:

A2D Eats Private Limited
Carbiforce Private Limited
Skidreamers Private Limited etc.

DPIIT Start-up Recognition Eligibility

Company age: The existence and operations of company should not be exceeding 10 years from the date of incorporation.
Company Type: The company should be incorporated as a private limited company, a registered partnership firm or a limited liability partnership.
Annual Turnover: It should have an annual turnover of not exceeding Rs. 100 crore for any of the financial years since its incorporation.
Original Entity: The entity should not have been formed by splitting up or reconstructing an already existing business.
Innovative & Scalable: The entity should work towards development or improvement of a product, process or service and have a scalable business model with high potential for creation of wealth and employment.

DPIIT Recognition for Startups Process

The DPIIT recognition process shall be as under:

A Start-up shall make an online application over the mobile app or portal set up by the DPIIT.
The application shall be accompanied by-

(a) a copy of Certificate of Incorporation or Registration, as the case may be, and

(b) a write-up about the nature of business highlighting how it is working towards innovation, development or improvement of products or processes or services, or its scalability in terms of employment generation or wealth creation.

The DPIIT may, after calling for such documents or information and making such enquires, as it may deem fit, –

(a) recognise the eligible entity as Start-up; or

(b) reject the application by providing reasons.

Start-up India Registration Process

Firstly, the user need to open startupindia.gov.in and click on register option to create an account with basic details like name, email ID, mobile number, password and then submit.
On the next displayed screen apply for DPIIT registration and login to the created account. On the next page click apply now and it will take you to a new screen.
Fill in the required details in the start—up recognition form such as the entity details, address, representatives and directors/partners details etc.
Then upload required and ready documents.
Post the above procedure you will get your recognition number with e-certificate. The certificate of recognition will be issued after the examination of documents usually done within 2 days after submitting the details online.

Start-up India Benefits

Self-certification: This is done to reduce the regulatory burden on startups, thereby allowing them to focus on their core business and keep compliance costs low. Startups shall be allowed to self-certify compliance for 6 Labour Laws and 3 Environmental Laws through a simple online procedure.

In case of labour laws, no inspection will be conducted for a period of 5 years and in environment laws, startups which fall under the ‘white category’ would be able to self-certify compliance and only random checks would be carried out in such cases.

Start-up patent application and IPR application: Patents are a way of protecting innovative new ideas that give company a competitive edge and helps increase the value of company. However, filing a patent can be expensive and time consuming process which can be out of reach of many start-ups.

So this objective helps reduce the cost and time taken for a startup to acquire a patent making it financially viable for them to protect their innovations.

Tax Exemption under 80IAC: Startups after getting recognized may apply for tax exemption under Section 80IAC of Income Tax Act. The start-up can avail tax holiday for three consecutive financial years out of its first ten years for incorporation.

Provided:

The entity should be a recognized start-up
Only Private limited or a Limited Liability Partnership is eligible for tax exemption under Section 80IAC.
The start-up should have been incorporated after 1st April 2016.
Section 56 exemption: A recognized start-up may apply for Angel tax exemption under which the aggregate amount of paid-up share capital and share premium of the start-up after the proposed issue of share should not exceed Rs. 25 crore.
Easy winding up of company: A recognized start-up could be easily wound up and relocate its capital and resources to more productive avenues faster. It helps encourage entrepreneurs to experiment eith new and innovative ideas, without having to face complex and long drawn exit processes.
Easier Public procurement norms: DPIIT Recognition for Startups, can register on Government e- marketplace (GeM) as sellers and sell their products and services directly to government entities which acts as a great opportunity for them to work on trial orders with the government.
Start-up exemption from years of experience and turnover: In order to promote start-ups, the government shall exempt startups in manufacturing sector from the criteria of “prior experience and turnover” without any compromise on the stated quality standards or technical parameters.
EMS Exemption: DPIIT Recognition for Startups have been exempted from submitting Earnest Money Deposit (EMD) or bid security while filling government tenders.

Conclusion

In summary, the journey of a start-up in India, supported by the Department for Promotion of Industry and Internal Trade (DPIIT), is a testimony to the nation’s commitment to fostering innovation and entrepreneurship. With DPIIT paving the way, the entrepreneurial journey of start-ups in India continues to be a saga of innovation, ambition, and the relentless pursuit of excellence. Therefore, in order to ease the process, a team of cagmc.com is here to assist you at every step and help you grow become a successful entrepreneur.