Startup India: Registration & Tax Benefits

DPIIT Recognition Criteria

To be recognized as a startup under the Startup India programme, entities must meet the following criteria set by the Department for Promotion of Industry and Internal Trade (DPIIT):

Incorporation

The entity should be incorporated as a private limited company under the Companies Act, 2013, or registered as a partnership firm or a limited liability partnership (LLP) under the LLP Act, 2008.

Turnover

The startup's turnover should not exceed INR 100 crore in any of the previous financial years.

Entity Age

The entity should not be older than 10 years from the date of its incorporation or registration.

Section 80-IAC: Tax Holiday

Eligible startups can avail a 100% tax exemption on profits for three consecutive years out of their first ten years since incorporation. This tax holiday is provided under Section 80-IAC of the Income Tax Act, aimed at reducing the financial burden on startups during their initial growth phase.

Self-Certification Under Labour and Environmental Laws

Startups recognized under the programme can self-certify their compliance with nine labour and three environmental laws. This eases the regulatory burden and reduces the cost of compliance, allowing startups to focus more on their business operations.

Fund of Funds for Startups (FFS)

The Government of India has established a Fund of Funds for Startups (FFS) with a total corpus of INR 10,000 crore. This fund is managed by the Small Industries Development Bank of India (SIDBI) and aims to provide funding support to startups through various venture capital funds.

80% Rebate on Patent Filing Fees

Startups are eligible for an 80% rebate on patent filing fees, which significantly reduces the cost of protecting intellectual property. This incentive encourages innovation and helps startups secure their inventions at a lower cost.

Comparison Table

Criteria/Incentive	Details
Incorporation	Private Limited Company, LLP, or Partnership Firm
Turnover Limit	Under INR 100 crore
Entity Age	Under 10 years
Tax Holiday	3 years out of first 10 years
Self-Certification	Labour and Environmental Laws
Fund of Funds	INR 10,000 crore via SIDBI
Patent Filing Rebate	80% rebate

FAQs

What is the maximum turnover for a startup to be eligible under Startup India?

The maximum turnover for a startup to be eligible is INR 100 crore in any of the previous financial years.

How long can a startup avail of the tax holiday under Section 80-IAC?

A startup can avail of the tax holiday for three consecutive years out of its first ten years since incorporation.

What is the purpose of the Fund of Funds for Startups?

The Fund of Funds for Startups aims to provide funding support to startups through various venture capital funds, helping them access the necessary capital for growth.

How does self-certification benefit startups?

Self-certification allows startups to comply with labour and environmental laws with reduced regulatory oversight, lowering compliance costs and administrative burdens.

What is the benefit of the 80% rebate on patent filing fees?

The 80% rebate on patent filing fees reduces the cost of securing intellectual property, encouraging startups to innovate and protect their inventions.

Disclaimer: This article is for informational purposes only and does not constitute legal, financial, or regulatory advice. Always verify current requirements with official sources or a qualified advisor before taking action.

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