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Startup India Scheme

Startup India Scheme is an initiative by the Government of India for generation of employment and wealth creation. The goal of Startup India is the development and innovation of products and services and increasing the employment rate in India. Benefits of Startup India Scheme is Simplification of Work, Finance support, Government tenders, Networking opportunities. Startup India was launched by Prime Minister Shri. Narendra Modi on 16th January 2016. Let us learn more about Benefits and Eligibility of Startup India.

  • Financial Benefits

Under this scheme, the government provides 80% rebate on the patent costs. Moreover, the process of patent registration and related is faster for them. Also, the government pays the fees of the facilitator to obtain the patent.

  • Income Tax Benefits

Startups enjoy a good amount of benefits under the Income Tax head. The government exempts their 3 years income tax post the incorporation year.

  • Huge Networking Opportunities

Networking Opportunities means the opportunity to meet with various startup stakeholders at a particular place and time. The government provides this opportunity by conducting 2 startups fests annually (both at domestic as well as the international level).

Features & Benefits

Startup India Scheme is an initiative by the Government of India for generation of employment and wealth creation. The goal of Startup India is the development and innovation of products and services and increasing the employment rate in India. Benefits of Startup India Scheme is Simplification of Work, Finance support, Government tenders, Networking opportunities. Startup India was launched by Prime Minister Shri. Narendra Modi on 16th January 2016. Let us learn more about Benefits and Eligibility of Startup India.

This initiative simplifies the work for the new entrants in order to motivate them. This includes following steps taken by the government:

  • Firstly, the government has set-up Startup India hubs where all the works related to incorporation, registration, grievance handling, etc.
  • Secondly, an application and an online portal is set-up by the government to facilitate registration from anywhere and anytime.
  • Thirdly, the patent acquisition and registration is now fast for the startups.
  • Lastly, according to the Insolvency and Bankruptcy Bill, 2015 facilitates fast winding up of the startups. A new startup can wind-up itself within 90 days of the incorporation.

In order to motivate the startups, the government provides various financial supports. These steps taken by the government are as follows:

The government has set up a corpus of Rs.10,000 crores for 4 years (Rs.2500 crore each year). From such fund, the government invests in various startups.

Special funds are provided, investment in which leads to exemption from the income tax on the Capital Gain.
Income tax exemption is available for the startups for the first 3 years after the incorporation.

Under The Income Tax Act, where a Startup (company) receives any consideration for issue of shares which exceeds the Fair Market Value of the shares, such excess consideration is taxable in the hands of the recipient as Income from Other Sources.

Investment by venture capital funds in Startups is exempted from the application of this provision. The same extends to the investment made by incubators in the Startups.

1. Firstly, the company to be formed must be a private limited company or a limited liability partnership firm.
2. Secondly, the firms should have obtained approval from the Department of Industrial Policy and Promotion.
3. Thirdly, it must have a recommendation letter by an incubation.
4. The firm must provide innovative schemes or products.
5. It should be a new firm or not older than five years.
6. The total turnover of the company should be not exceeding 25 crores.
7. Lastly, it should not be a result of splitting up, or reconstruction, of a business already in existence.

1. People generally believe startups are just about thinking about a new idea or plan. But in reality, execution of such plan is more necessary than just thinking about it.
2. The view or perspective of the government on startup India plan is quite short-term in nature. It does not look at the long-term path of the startups.
3. For the success of any new business, competent workforce is necessary. But in case of startups, skilled workforce is not possible due to the lack of funds at the initial phase.
4. The risk of reaching failure is greater in the startups as compared to other organizations. It is because they tend to take steps quite fast.

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