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DPIIT STARTUP INDIA RECOGNITION

The Government of India under its flagship programme "Startup India" introduced the concept of an "Eligible Startup“ in the year 2015.
A formal national policy framework was launched in February 2016 called the Startup India Action Plan.
Department for Promotion of Industry and Internal Trade (‘DPIIT’) has defined the criteria for "Eligible Startup“.
"Eligible Startups" entitled to benefits announced by government under various programmes, schemes and regulations.
Startup can get recognition through an online application on https://www.nsws.gov.in/ (NSWS portal)

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REGISTRATIONS

Registration under Department for Promotion of Industry and Internal Trade (‘DPIIT’) to recognise as “Eligible startup”.

Certification of Eligible Business from Inter-Ministerial Board of Certification.

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�

REGISTRATION UNDER DEPARTMENT FOR PROMOTION OF INDUSTRY AND INTERNAL TRADE (‘DPIIT’)

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ELIGIBILTY CRITERIA TO CONSIDER AS A STARTUP�

Types of entities

Incorporated as a

Private Limited Company,
Registered Partnership Firm or
Limited Liability Partnership

Incorpration criteria

Not older than 10 years from the date of incorporation/registration.

Turnover

Annual turnover not exceeding Rs. 100 crore for any of the financial years since its incorporation/registration.

Innovation, development/improvememt, employement/wealth creation

Working towards

Innovation, development or improvement of a product, process or service and/or

Scalable business model with high potential of employment generation or creation of wealth .

No Splitting/ Reconstructing

Entity should not have been formed by splitting up or reconstructing an already existing business

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�INFORMATION REQUIRED FOR REGISTRATION�

Name
Industry
Sector
Categories
PAN
Address

Details of the company/ LLP/Partnership firm

Details of Partners/ Directors

Current number of employees(including founders)

Ideation-You have an idea for product or service
Validation- Build a prototype
Early Traction-Acquiring customers.
Scaling-Grow & create Sustainable profits

Stage of the startup

Is your startup creating an innovative product/service/process or improving the existing product/service/process.

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Is your start-up creating scalable business model with high potential of employment generation or wealth creation.

Brief note about innovation, improvement and scalability

Has your startup receiving funding. If yes, proof of funding.

What is the problem solving.
How startup will help in problem solving.
Uniqueness of solution.
How does your startup generate revenue.

Startup Activities

Brief how your startup is innovative and/or scalable.
Number of people employed and funding raised, if any
Credentials of founders/Management
Screenshots of images of product/website link, if any.

Pitchdeck

Startup Video Link

Copy of Incorporation/registration certificate

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�

Certification of Eligible Business from Inter-Ministerial Board of Certification (u/s 80IAC)

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ELIGIBILTY CRITERIA TO CONSIDER AS A STARTUP�

Types of entities

Incorporated as a

Private Limited Company,or
Limited Liability Partnership

Incorporation criteria

Incorporated on or after 1st April 2016 but before 1st April 2025

Defination of ‘Eligible Business’

Working towards

Innovation, development or improvement of a product, process or service and/or

Scalable business model with high potential of employment generation or wealth creation .

No Splitting/ Reconstructing

Entity should not have been formed by splitting up or reconstructing an already existing business

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Entity should not be formed by the transfer to a new business of machinery or plant previously used for any purpose.(except only 20% of the total value of the machinery or plant previously used can be utilised in Startups).

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�INFORMATION REQUIRED FOR REGISTRATION U/S 80IAC

Application can be made online in Form 1 on www.startupindia.gov.in

Name of the startup
Date of incorporation
Incorporation no.
Address
Nature of business
DIPP no.

Details of Startup

Contact details of Start-up

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DOCUMENTS REQUIRED FOR REGISTRATION U/S 80IAC

MOA/LLP deed

Annual accounts & ITR for last 3 financial years.

Startup Video link

Pitchdeck

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HOW TO AVAIL DEDUCTION

Amount of Deduction

100% of Profits and gain derived from Start-up business.

Turnover Criteria

Total turnover of its business does not exceed 100 crore rupees in the previous year for which deduction is claimed.

Period of Deduction

Deduction available, at the option of assesese for any 3 consecutive assessment years out of 10 years beginning from the year in which the eligible start-up is incorporated.

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1,38,260

DPIIT Recognised Startups

2976

Income Tax Exemption Startups

Number of Startups registered on DPITT Portal till date

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ANGEL TAX INCENTIVE

Section 56(2)(viib)

Angel Tax is a term used for tax proposed to be levied on consideration received by privately held companies towards issue of shares for a value that exceeds the face value of such shares.

Where such value i.e. essentially the premium on the shares cannot be justified.

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�EASED CONDITIONS FOR START-UP�

Notification No. G.S.R 127 (E) dated 19.02.2019

Declaration in Form 2 must be filed with DPIIT.

Exemption from the provisions of Section 56(2)(viib), if it fulfils the following conditions:

it has been recognised by DPIIT ;
aggregate amount of paid up share capital and share premium of the startup( after issue or proposed issue of share)<= INR 25Cr.

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EXCLUSIONS IN THE LIMIT OF INR 25 CR

Venture capital company or venture capital fund

Specified Company

Non-resident Company

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MEANING OF SPECIFIED COMPANY

A company whose shares are frequently traded and

whose net worth on the last date of financial year preceding the year in which shares are issued exceeds INR 100 Crores or

turnover for the financial year preceding the year in which shares are issued exceeds INR 250 Crores.

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�RESTRICTIONS ON INVESTMENTS RAISED FOR ANGEL TAX EXEMPTION

No investment shall be made in the following assets for a period of 7 years from the end of latest financial year in which shares are issued at premium:

building or land appurtenant thereto, being a residential house*
land or building, or both, not being a residential house*
loans and advances*
capital contribution made to any other entity;
shares and securities;
a motor vehicle, aircraft, yacht or any other mode of transport, the actual cost of which exceeds ten lakh rupees.*
Jewellery*
any other asset, whether in the nature of capital asset or otherwise, of the nature specified in sub-clauses (iv) to (ix) of clause (d) of Explanation to clause (vii) of sub-section (2) of section 56 of the Act.

*Exemption will be available if invested in the ordinary course of business

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RELAXATION IN CHANGE OF SHAREHOLDING FOR CARRY FORWARD OF LOSSES

Section 79

Carry Forward Loss even if there is change in 51% shareholding, provided all shareholders as on year of losses continue to be shareholder in current year (i.e. year of set-off)
Available for 80IAC Recognised Startups.

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Summary

	Recognition from DPITT	Inter-Ministerial Board Certification
Tax Exemption (Section 80-IAC)	✔	✔
Carry forward of Loss ( Section 79)	✔	✔
Angel tax exemption (Section 56(2)(viib)	✔	🗶

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Summary

	Company	Limited Liability Partnership	Partnership Firm
DPIIT registration	✔	✔	✔
Tax Exemption (Section 80-IAC)	✔	✔	🗶
Carry forward of Loss ( Section 79)	✔	🗶	🗶
Angel tax exemption (Section 56(2)(viib)	✔	🗶	🗶

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OTHER BENEFITS AVAILABLE TO STARTUPS

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Self Certification

Relaxed norms for public procurement

Faster Exits

Fast tracking of Patent & Trademark applications

Funding incentives

Credit guarantees

Programmes

State Government incentives

Other Facilities

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SELF CERTIFICATION �

Startups shall be allowed to self-certify compliance with 9 labour laws and 3 environment laws.

Labour Laws

Environment Laws

No inspection for 3 years

‘White Category’ startups would be able to do self compliance & only random checks to be carried out.

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FAST TRACKING OF STARTUP PATENT & TRADEMARK

Fast-tracking of Startup patent & Trademark applications.

Panel of facilitators to assist in filing of applications.
Government to bear facilitation cost.

80% rebate in filing of patents vis-a-vis other companies and 50% rebate in filing of trademark cost.

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RELAXED NORMS OF PUBLIC PROCUREMENT

Requirement exemption

Start-ups shall be exempt from the criteria of “prior experience/ turnover” without any relaxation in quality standards or technical parameters

Feedback mechanism

Buyers can rate your product or service . Given the large scope of public procurement, this can help to fine tune and adapt your product for scale.

Pilot Projects

Trial orders with the government, making them more likely to take chances on new product.

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FASTER EXIT FOR STARTUPS

Start-ups can be wound up within a period of 90 days from making of an application on a fast track basis under Insolvency and Bankruptcy Code, 2016 (‘IBC’).
However, in case of other companies, it takes a period of 180 days to wind up.

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PROGRAMMES, EVENTS & WORKSHOPS

Various programmes like challenges, workshops events are organised by corporates & government departments to boost startups.

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THANK YOU

CA. Vidhu Duggal

Vidhu Duggal & Company, Chartered Accountants

vidhuduggal94@gmail.com