Benefits and exemptions under Start-Up India
Under the Start-up India initiative, start-ups recognised by Department for Promotion of Industry and Internal Trade (DPIIT) are eligible to various benefits and exemptions (tax benefits, easier compliances, faster IPR tracking et al.)
DPIIT recognition and benefits
- Registration benefits
- Patents & trademark benefits
- Ease access to funds
- Insolvency and Bankruptcy Code benefits #### MSME scheme
- Delayed payment protection
- Interest rate on overdraft
- Patent subsidy #### Tax benefits
- Section 80 IAC registration
- Section 56 clause (viib) of Income Tax – Angel Tax
- Section 54 EE exemption
- Section 54 GB exemption
DPIIT recognition and benefits
1) Registration, compliance and other benefits-
- Easy registration: On Start-up India mobile app or website, fill a form and upload required documents making your company DPIIT recognizable within 48 hours.
- Labour law compliance: Start-ups are allowed to self-certify compliances for 6 Labour Laws and 3 Environmental Laws online. (More information on 9 laws labour and environmental laws)
- No inspection will be conducted for a period of 3 years, in case of labour laws. Start-ups are only inspected upon a verifiable complaint of violation in writing and after approved by a level senior to an inspecting officer.
- Application to Government tender: Startups can apply for government tenders with no prior experience/ turnover applicable.
1) Patents and Trademarks -
- Start-ups save up to 80 percent in filing patents, government is said to bear facilitator costs for any number of patents, trademarks or designs that Start-up may file, while the company only pays statutory fees.
- Start-up patent application and screening process are fast-tracked for examination.
- A panel of ‘facilitators’ is enrolled by the Controller General of Patents, Designs and Trademarks (CGPDTM) to help on various intellectual property matters.
2) Easy access to funds –
- Government has urged about 1.25 lakh bank branches across India to fund at least one start up.
- Government has set up INR10,000 crore to fund start-ups.
- NASSCOM started ‘10,000 start-ups initiative’ for the next 10 years, helping start-ups raise funds, collaborate top accelerators, provide mentorship and much more.
3) Easy Exit –
- Startups with simple debt structures can wind up in 90 days of filing insolvency, under the Insolvency and Bankruptcy Code (IBC), 2016.
Ministry of Micro, Small & Medium enterprise
- CGS MSME scheme: The government launched a Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGS) to make collateral free loan from banks for both existing and new enterprises.
- Patent subsidy: Post receiving MSME certificate enterprises can avail 50 percent subsidy on patent registration.
- Industrial promotion subsidy: MSME certified enterprises are eligible for industrial promotion subsidy.
- Concession on interest rate: Depending on the bank, enterprises with MSME registration can avail up to 1 percent exemption on interest rate on overdraft and up to 3 percent interest rate exemption on term loan.
- Delayed payment protection: MSME registered enterprises are given protection against delayed payments, failure on payment of 45 days the buyer will result in compound interest with monthly interest rests to the supplier from the date of agreement or 15 days of receiving the goods or services.
- Concession on electricity bills: Enterprises can avail concession on electricity bills by applying to electricity department post receiving the MSME certificate.
- Reimbursement ISO certificate charges: Enterprises holding the MSME certification can reimburse 75 percent of International Organization for Standardization (ISO) certificate from MSME fund.
- CLCSS: Credit linked Capital Subsidy Scheme provides upfront of 15 percent capital subsidy on new technology to business owners to replace their old obsolete technology. ### Tax Benefits and exemption
1) Section 80 IAC Tax exemption - Startups are provided a certificate by Inter-Ministerial Board (IMB) exempted from income tax for a period of 3 financial years in the first 10 years of incorporation. 2) Section 56 clause (viib) of Income Tax [Angel Tax] – With certain conditions under Income Tax, startups are exempted from capital investments from investors. 3) Section 54 GB – Tax exemption to individual/ HUF on investment of long-term capital gain in equity shares of eligible start-ups provided the shares are not sold or transferred within 5 years from the date of acquisition. 4) Section 54 EE – Exemption of tax from long-term capital gain of a maximum amount invested on a long-term specified asset is INR50 lakh, if invested in specified units.
For more information on DPIIT or MSME.
Agrya will assist on documents being in order, conduct due diligence and walk through the registration process, avail benefits and necessary certificates. [Need to attach Agrya banner or a ‘click here’ linking to our website/ contact us form]