According to Income tax rules, A startup can be a company or a Limited Liability Partnership engaged in a business that involves innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property. It is a newly established business usually small started by 1 or a group of individuals. What differentiates it from other new businesses is that a startup offers a new product or service that is not given elsewhere in the same way.

A startup’s paid up capital should not exceed INR 10 crores.

How to Register your Startup with Startup India Scheme??

The Startup India Scheme is an initiative of the Government of India in 2016. The Primary Objective of Startup India scheme is the promotion of the startups, generation of employment and wealth creation.


The first step is to Incorporate your Business as a Private Limited Company or a Partnership firm or a Limited Liability partnership.


The business must be registered as a startup. You just need to Log on to Startup India website and fill up the form with details of your business. Then enter the Otp which is sent to your email and other details like startup as type of user, name and stage of the startup etc. After entering these details, the startup India profile is created.


The next step after creating a profile on startup India website is to avail Department for Promotion of Industry and Internal Trade (DPIIT) Recognition.

The main objectives are:

· To Support Entrepreneurs.

· Creating Jobs and Employment.

· For Promotion of Innovative Startups.

· To provide all resources and opportunities to startups.

This recognition helps the startups to avail the benefits like access to high intellectual property services and resources, relaxation in public procurement norms, self certification under labor and environmental laws, easy winding up of company, access to funds of funds, tax exemption for three consecutive years and tax exemption on investment above fair market value.


1. Incorporation/ Registration certificate of Startup

2. Details of the directors

3. Proof of concept like pitch deck/ website link/video ( In case of a validation/early traction/scaling stage startup)

4. Intellectual property right product details : trademark/patent/copyright ( Optional)

5. Pan number


After applying you will get a recognition number for your startup. The certificate of recognition is issued after the examination of documents which usually takes around 2 days of time. Be careful at the time of uploading the documents as if it is found that the documents are not uploaded/ wrong documents or forged documents then you will be liable to a fine of 50% of your paid up capital or minimum of INR 25000/-


a) Patent /Trademark/copyright or a design registration

If you require a patent for innovation or a trademark for your business, you can approach from the list of providers issued by the government. You only need to bear the statutory fees and thus will get you 80% reduction in the costing.

b) Funding: The key challenge faced by almost every emerging startup is the access to funding. Due to lack of experience, security or existing cash flows, entrepreneurs fail to attract investors.

In order to provide funding support, government has set up a fund with a initial corpus of INR 2500 crore and a total corpus of INR 10000 crores over a period of 4 years ( i.e. INR 25, 00 crore per year). The fund is in the nature of Funds of Funds, which mean that it will not invest directly into startups, but shall participate in the capital of SEBI registered Venture Funds.

c) Tax Exemption:

The startup recognized companies are eligible to avail tax exemption under section 80 IAC and Sec 56 of Income tax act . Under sec 80IAC the entity gets tax exempted for 3 consecutive years & under sec 56- the entities which receive any contribution for issue of shares which exceed the fair market value of shares, they don’t need to pay tax on the amount exceeding the fair market value( FMV).

Eligibility for Sec 80IAC:

1. The entity should be a recognized startup.

2. The entity should be incorporated on or after 1st April 2016 but before 1st April 2021.

3. Startup is engaged in innovation, development of products or services.

4. High potential of employment generation or wealth creation.

Eligibility for Sec 56 Angel tax Exemption:

1. The Entity should be a DPIIT recognized startup.

2. Aggregate amount of paid up share capital & share premium of startup after the proposed issue of share does not exceed INR 25 crore.

d) Easy Winding up of Company

Startups registered under Startup India scheme can avail easy exit route for winding up of the company within 90 days under Insolvency & Bankruptcy code 2016, incase startup business model failed.

About Solvesto :

Founded in 2016, Solvesto is a management consulting firm providing Assurance, Taxation and Advisory services. The firm is know for its professional ethos and technical expertise and a team of highly competent professionals, we provide efficacious solutions to our client’s needs, running into deep engagements. Since businesses are inherently different, we tailor our services to meet client’s specific needs and banish the ‘one size fits all’ standardization. We recruit, train, motivate and retain highly capable and sharpest talent, who bring quality in their work and deliver the best solutions.

The firm is headquartered in Indore with Branches at Jaipur, Jabalpur, New Delhi, Mumbai and Pune and leverage our state of art infrastructure, wide network, best practices and people development programs.

17 views0 comments

Recent Posts

See All