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INTRODUCTION

A startup is a newly business setup that is small in nature and initiated by single or a group of individuals. What makes the startup different from other businesses is that a startup presents a new product or service that is not in present at some other place in the same manner. The base of startup is modernisation and innovation. The enterprise which indulge in developing the new product or service or redevelop the current into something better is signifies as startup.


DESCRIPTION

Startup India is a campaign that is established in year 2016 by the Prime Minister Narendra Modi Ji with the intent to boost entrepreneurship. This action plan has various objectives like promotion of bank financing for the startup, to simplify the process for the startup registration and incorporation and along with that aimed to grant many tax aids to newly established startup. But all the advantages and exemptions are on hand to the startups solely if they satisfy below mentioned criteria of an ‘Eligible Startup’.



Eligibility Criteria for startup recognition

  • Upto a period of 10 years from the date of incorporation, if it is integrated as a private company (as defined in the companies act, 2013) or a limited liability partnership (under the LLP act, 2008) or can say registered as a partnership firm under the provision of section 59 of the Indian partnership act, 1932.
  • An enterprise shall be consider as a startup only up to ten years from the date of its registration
  • Turnover of the entity since incorporation shall be less than one hundred crore rupees for any of the previous financial years.
  • Entity is working in the direction of innovation, development or enhancement of products or processes or services, or if it is a scalable enterprise model with a high manageable of employment generation or can say creation of wealth.
  • An entity must be newly formed or if in case it’s being registered by way of splitting up or renewal of an existing one then it shall not be considered in ‘Startup’.

Tax exemptions in startup India plan

  • Startup India tax exemption under section 80 IAC says that a startup may apply for tax exemption after being registered by DPIIT. DPIIT registration certificate and approval of inter-ministerial board allows the startup to avail tax excursion for three consecutive financial years out of its first ten years since incorporation. One entity must be eligible for this exemption if they are incorporated in form of private limited or LLP after 01 Apr, 2016 and they got the certificate of recognised startup.
  • Tax Exemption under section 56 of the income tax act (Angel Tax)- Unlisted companies raise the capital by way of issuing the shares and the share prices is more than FMV of share sold. Entity after getting registration as startup is eligible to apply for angel tax exemption. An entity must be recognised by a department for promotion of industry and internal trade and the cumulative amount of paid-up share capital and share premium of the startup must not exceed Rs 25 crore after the anticipated share issue.

Process of startup recognition

The recognition process of an entitled entity shall be as further down:

  • An online application shall be made at given portal for the startup recognition.

  • The application shall be supplemented with the copy of registration certificate of business and detailed description about the nature of business that brings the uniqueness in product or process. Description must focus on the innovation, creativity or enhancement that helps to boost the economy.

  • After receiving all details and documents, the authority may recognise the entity as startup if he thinks all documents are sufficient enough, or he may reject the application.

Application for tax exemption procedure after recognised by DIPP

  • Make signup and create login credentials on the startup India portal.
  • One has to make an application for startup recognition which is pre-requisite for the next tax holiday request. On positive validation and approval of application, the startup shall obtain a "certificate of recognition" with DIPP number.
  • From now the registered establishment are eligible to get tax benefit or tax holiday after the approval from IMB (Inter-ministerial Board) and the following landmark is to make an application u/s 80-IAC online.
  • The application shall be examined for uniqueness, innovation, scalability and significance of sector and other parameters by using the "Technical Agency" who shall put up the case within the next meeting. Before this stage, if some clarification is required to be sought, the utility is moved for resubmission and therefore the query is communicated through email. Each startup gets three probabilities of resubmissions which include the primary utility made.
  • On approval from IMB in its assembly comprising of various officials, a "certificate of eligibility" is issued to the startup or the application is rejected.
  • DPIIT number with details of startup application and other tax benefit certificate details is to be feed into ITR at the time of claiming exemption.

Compulsory documents for startup recognition

  • Copy of certificate of incorporation or LLP registration certificate with Pan card
  • Copy of memorandum of association or LLP agreement
  • Brief details about company and products or services
  • Brief profile of directors and authorised representative such as email Id, contact details, and address etc.
  • Annual accounts of the startup for the last three financial years
  • IT returns for the last three financial years
  • URL link of a website and social profile of the entity
  • Mobile app link or any video relates with business product
  • Trademark, patent or any other IPR filing number and logo (filed or registered)

Rewards to eligible startup under startup India program

  • 3 year tax excursion in a block of seven years The startup registered after April 1, 2016, is eligible for getting a hundred percent tax rebate on profit for the time period of 3 years in a total of 7 years but annual turnover must not exceed 25 crore in any of monetary year.
  • Exempted long term capital gain tax Section 54 EE of income tax is introduced to exempt taxes on a long term capital gain if such a long-term capital obtains or a phase thereof is invested in a fund notified by using Central Government inside a length of six months from the date of transfer of the asset. The most amounts that can be invested in the long-term specific asset are Rs 50 lakh. Such quantity shall be continued to be invested in the targeted fund for duration of three years. If withdrawn before three years, then exemption will be revoked in the year in which money is withdrawn.
  • If investment above the fair market value The authority has exempted the tax being levied on investments above the fair market value in eligible start-ups. This must be made by domestic angel investors or family but must not be registered as venture capital funds. If investment done by incubators then also it’s exempt but it must be above the fair market price.

Services offered by NeuSource

  • Company Registration
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  • Trademark Filling
  • GST Registration
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  • ISO Certification
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  • Lite+
  • Website For Startup Registration
  • Startup Recognition under DPIIT
  • Startup India Portal Registration
  • GeM Portal Registration
  • Startup Consulting
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  • Basic+
  • Exemption Certificate Under 80IAC
  • 59 minutes MSME Loan Application Filling
  • Video Pitch for Startup Recognition
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FAQ's

Register your startup with us to get more benefits

  • What's startup India hub?

    Startup India Hub is a one-stop platform for all stakeholders within the startup system to move amongst one another, exchange knowledge and form fruitful partnerships.

  • Can a foreign company is eligible to register under startup India hub?

    Any entity who have atleast one place of work in India then he is eligible to register on the hub. It provides location based preferences and now solely created for Indian states. However, we are working on international relations and will be able to allow listing stakeholders from the global network.

  • Will an OPC is eligible to avail advantages of startup India?

    OPC stands to one person company and these firms are eligible to avail advantages of the startup India initiative.

  • Once my registration is prosperous, would I acquire a certificate for it?

    Yes, after getting a fruitful registration, one would be able to take a system generated verifiable certificate of recognition.

  • Why do investors invest in startups?

    Investing in startups may be a risky proposition, however the low demand for overhead capital combined with high side potential, makes it profitable for investors to apart their stakes on startups.

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