In the present scenario, 50,000 start-ups running successfully in India.
The assumption is that every day 3 to 4 tech start-ups start their journey with great hope and visionary dream.
Let’s check out the list and get the step-by-step process so that in the coming days you can register your business under the govt scheme.
So, How to start a startup in India?
If you’re planning to start your venture, you have to be well organized. Along with the business plan, you need to keep ready the necessary documents to produce at the time of registration.
While arranging the documents, you need to know the specific department that issues those letters or files.
Let’s see how many aspects you need to cover in your planning section.
- Budget issue
- Investment part
- Various govt scheme for male & female entrepreneur
- Various registration process
- Legal aspects of the start-up scheme
- Application procedure
We would like to start the discussion from the budget and investment part. Because it is a crucial step one needs to know in detail before planning to start the business.
How much does it cost to start a start-up in India?
The budget issue and investment part depend on what category of business you are choosing and the scale of your business entity. For small-scale and home-based start-ups, even one can start with 10,000 INR with single manpower.
But if you need a team and the business required an entity in the market, the amount will cross 1 lakh and more than that. Therefore, according to the product and service, you can figure out the investment and fund.
A piece of information would be helpful for female entrepreneurs. Every year Goldman Sachs company has been arranging start-up workshops for 10,000 females participants. The company would provide all the guidance along with relevant support to establish your company.
The program is free, but you need to arrange your travel, food, and staying with your expenses. For the registration process, time and other info click the link
Here’s the application form to apply.
As long as you are investing money from your pocket or you have the fixed budget readily available, you are free from monetary tension. But if you go for a business loan from govt.
Or, private bank or you are looking for an investor for funding you must know the process of how to approach.
Still in doubt? Scroll down to know more about the investment section of the start-up.
How to get investors for start-ups in India?
If you are planning to outsource your funding for the business, you need to know the basic concept of funding status in India. There are four major steps in the funding issue.
1. Why is the funding required: Based on your business scale and category, you should prepare a business plan while approaching the investors. Here’s a detailed guide on Funding requirement.
2. Types of funding: Based on nature, risk factor, and pressure on repayment, return to the investor, involvement in decision and the source 3 kinds of funding that exist, Equity financing, Debt financing, and Grants.
3. Stages of start-ups and sources of funding: There are various sources for funding the start-ups. In some cases, it depends on which stage your business is and how much revenue you are expecting to generate. To get the information in detail click the link and follow the chart below.
4. How to raise Equity funding: TheFunding deck requires your business presentation and revenue generate module. Angel investors and start-up investors are ready to fund those businesses that have clear objectives, marketing plans, business expansion concepts, and profit generates plans, etc.
In every step, there is a process, and in every process, they want your master plan.
To encourage the youths and take up the risk, generate local employment, the Indian govt has launched a scheme on start-ups.
The purpose of the scheme is to promote Indian Youths in Business, departmental information sharing, resolved the funding issues, provide supports from various departments to launch your business.
Let’s see what the start-up scheme is and what kind of benefits one entrepreneur would get after the registration formality.
What is the Start-up Scheme?
As we already mentioned to you that the objective of the start-up scheme is to promote the business and provide a business platform for Indian youths. If you have innovative ideas and excellent business skills, you can avail the benefit of the scheme. Let’s check more details on it.
Under this scheme, we need to check 2 main criteria and which are the eligibility and the registration process along with legal aspects. Eligibility plays an important role in registration and tax exemption. Here, first, I’ll discuss the legal aspect and tax exemption; the registration process later follows.
As per the Start-up India Action Plan, the definition of the eligibility must meet as prescribed under G.S.R notification 127(E) should have supportive documents regarding 2 major aspects. They are
- The start-up must be incorporated as a Private Limited company firm, or a Limited Liability Partnership( LLP) or, Partnership Firm.
- The capital turnover does not exceed more than 1 crore INR/ annum in any previous financial years.
Indian govt launches the relevant notification which can guide you and you can get all the information regarding the eligibility requirements.
For eligibility, make sure you are
- A private limited firm, or Limited Liability partnership firm, or Partnership firm.
- Your business is innovative and does not copy or match with other businesses already existing in the market.
- The capital turnover of your firm does not exceed 1 crore INR/annum in any previous financial years.
- Your business entity must be incorporated after the 1st of April, 2016
After getting the confirmation of the eligibility, you can apply for the tax exemption for up to 3 consecutive years. These 3 years you can avail of tax exemption benefits whether you’re facing profit or loss in your business.
Let’s see how you can apply for the tax exemption benefits.
80 IAC Tax Exemption scheme
Under this scheme, you can apply for the tax exemption, which comes under the 80 IAC Income Tax Act. You will get 3 consecutive financial years a holiday period and no need to pay tax to the govt. To avail of the benefits, you must have these criteria.
- Your business should be a recognized start-up.
- Only private limited or limited liability partnership can avail benefits of 80 IAC Tax exemption.
- Your business must be incorporated after 1st April 2016
You need to keep those documents that support the above statement to apply for eligibility.
Tax exemption under section 56 of the Income Tax Act ( Angel Tax)
You can apply for the Angel Tax exemption, which comes under section 56. But before the application, you need to know the below criteria for the eligibility to apply
- Your business should have DPIIT recognition ( DPIIT is a kind of certificate)
- An aggregate amount of paid-up share capital and the share premium of the start-up does not exceed more than 25 crore INR
Below is the status of the applications and validate certificate number/entity name.
Funding and the tax exemption process is an important step while you are going to avail the govt scheme benefits.
How do you register your business under a start-up scheme in India?
It is the most vital aspect of your efforts. For registration under the start-up scheme, you need to follow the step by step process. All the processes were incorporated by Indian Govt officials and implemented from the 1st of April in 2016. Let’s check out the process of the registration
Step 1: Consolidate your business entity
Before filling up the registration form, you need to consolidate your business as a Private Company firm, or Limited Liability Partnership, or A Partnership Firm. This is a mandatory process.
Step 2: Documents you need to prepare in PDF format only
Keep ready a recommendation letter from an incubator known in the post-graduate college in India. The DIPP ( DEPARTMENT OF INDUSTRIAL POLICY & PROMOTION) approved the format after knowing the innovative nature of your business.
A recommendation letter must be with you from an incubator that the govt. Of India funds your business to specify the promotion of the innovation. Or,
- A letter from incubators, recognized from govt. Of India in DIPP format. Or,
- A letter of funding not less than 20% in equity, by an Incubation fund, Private Equity Fund, Angel Fund, registered with SEBI that endorses the innovative nature of your business. Or,
- A letter from Central govt. Or any state govt. Of India. Or,
- For the researched-based product, you need a Patent filed and published in the Journal of Indian Patent office.
- Incorporation or consolidate certificate
In the end, you will get a description box to describe the nature, type, category, and scale of your business briefly.
Step 3: Mention whether you want tax exemption
While filling up the form, you have to mention whether you want the tax exemption benefits or not. In India, you are eligible to get 3 consecutive financial years a holiday period, and the Inter-Ministerial Board( IMB) certified company would avail such benefits.
Step 4: Self-certification criteria as follows
- Your business entity must be a Private Limited Firm, Limited Liability Partnership, or a Partnership Firm.
- The company’s turn over must not exceed 100 crore INR
- The company has been into innovation, and the progress is on the way to promote for the betterment.
- Your company must inculcate new ideas and concepts and not split out from any existing business in the market.
- Your company establishment date must be after the 1st of April in 2016
Step 5: You are ready to register
Along with all the above-stated documents, you need to log in to the Start-up India Scheme website and fill-up the form with relevant information sharing. Click the link to get the registration form
Step 6: Get your recognition number
After filling up the form, you will get a recognition number with immediate effect. One thing you must remember that the data you’re providing must be genuine and authentic. Or else you have to pay a fine of 25,000 at the minimum charge or 50% of the paid-capital.
You get the registration certificate only after the verification of all the data by the authority.
What is the DPIIT Certificate or Start-up Certificate?
After filling up the form on the Start-up India Scheme website with relevant data, the authority will verify the details you provided. After the verification, the authority( the Department for Promotion of Industry and Internal Trade, DPIIT) issues the registration certificate under the scheme of start-ups in India.
Therefore, the DPIIT certificate is valid and an authentic document to start your company anywhere in India.
But in some cases, the state govt has initiated different criteria, but rules and regulations are the same as central govt eligibility.
What is the registration fee under the Start-up Scheme?
There is no registration fee. It’s free as it’s a govt initiative to provide the platform to start your company or business.
Now you are ready to start your company under the Start-up Scheme and can avail all the benefits the Indian govt has been providing for the business owners.
For the registration certificate one thing you must remember that all the information you’re sharing with govt officials is authentic in its terms. False or inappropriate information can lead to trouble in your future endeavour.
Best of luck to the future business owners!
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