The Startup India Scheme is a government-led project aimed at creating jobs and income in India. Startup India’s mission is to produce and innovate goods and services while also improving India’s employment rate.
Workflow simplification, financial help, government tenders, and networking possibilities are all advantages of the Startup India Scheme. Prime Minister Shri Narendra Modi inaugurated Startup India on January 16, 2016. Let us understand more about Startup India’s Benefits and Eligibility.
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Startup India Scheme Action Plan
Startup India’s action plan is based on the following factors:
This effort makes work easier for newcomers in order to inspire them. This includes the following government actions:
- To begin, the government has established Startup India centres where all of the necessary paperwork for formation, registration, and grievance resolution may be completed.
- Second, the government has created an application and an online gateway to make registration easier from anywhere and at any time.
- Finally, patent acquisition and registration are now rather quick for companies.
- Finally, the Insolvency and Bankruptcy Bill of 2015 makes it easier for businesses to wind down quickly. Within 90 days of establishment, a new business might be winding down.
The government offers a variety of financial incentives to startups in order to encourage them to succeed. The government has taken the following steps:
- The government has set up Rs.10,000 crores for a four-year fund (Rs.2500 crore each year). The government invests in several businesses from this fund.
- Special funds are available, and investing in them entitles you to a capital gain exemption from income tax.
- For the first three years following formation, startups are free from paying income taxes.
- The excess consideration received by a Startup (business) for the issuing of shares that exceeds the Fair Market Value of the shares is taxable in the hands of the beneficiary as Income from Other Sources under the Income Tax Act.
- This clause exempts venture capital funds from applying it to startup investments. The same may be said about incubators’ investments in startups.
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Benefits of Startup India Scheme
The majority of the startups are founded on patents. It signifies they create or supply one-of-a-kind products or services. They must pay a significant amount of money to register their patents, which is known as the Patent Cost.
The government offers an 80% discount on patent charges via this programme. Furthermore, the patent registration and associated processes are expedited for them. In addition, the government pays the facilitator’s expenses for obtaining the patent.
Benefits from Income Tax
Under the Income Tax section, startups get a lot of help. After the incorporation year, the government exempts them from paying income tax for the next three years.
However, they will only be able to use it after receiving a certificate from the Inter-Ministerial Board. They can also claim a capital gains tax exemption if they invest in specific funds.
Benefits of Registration
Everyone assumes that forming and registering a business is significantly more difficult than actually running one. It’s due to the lengthy and complicated registration process.
A registration application is available under the Startup India initiative. At the Start-up India hub, a single meeting has been scheduled. There is also a single window for them to ask questions and solve problems.
Tenders from the government
Because of the big payouts and large projects, everyone wants to get their hands on government tenders. However, obtaining government bids is not straightforward.
Startups are given precedence in government tenders under this programme. They also don’t have to have any prior experience.
Huge Networking Prospects
The ability to interact with diverse startup stakeholders at a certain location and time is referred to as networking opportunities. The government facilitates this by hosting two startup festivals each year (both at domestic as well as the international level).
Intellectual Property workshops and awareness are also provided as part of the Startup India programme.
Following types of businesses are eligible to register as a startup.
- Partnership Firm
- Limited Liability Partnership Firm
- Private Limited Company
Eligibility for Startup India Scheme Registration
- To begin, the new company must be a private limited company or a limited liability partnership.
- The enterprises should have received clearance from the Department of Industrial Policy and Promotion, as well.
- It must also have a letter of recommendation from an incubator.
- The company must come up with new ideas or goods.
- It should be a new company or one that hasn’t been around for more than five years.
- The company’s total revenue should not exceed Rs. 25 crores.
- Finally, it should not be the product of the dissolution or restructuring of an existing firm.
Difficulties faced by Startup India Scheme
- Many people feel that starting a business is just a matter of coming up with a fresh idea or strategy. But, in fact, putting such a strategy into action is more important than merely thinking about it.
- The government’s outlook or viewpoint on the Startup India strategy is quite short-term. It does not consider the startups’ long-term prospects.
- A qualified personnel is required for the success of every new firm. However, owing to a shortage of funding in the early stages, competent staff is not viable for startups.
- When compared to other businesses, startups have a higher risk of failing. It’s because they have a tendency to move quickly.