When an Entity Ceases to be a Startup

An entity shall cease to be a Startup:

• On completion of seven years from the date of its incorporation/registration, ten years in case of Startups in Biotechnology sector, or
• If its turnover for any previous year exceeds Rs. 25 crore

Maksim Consultant team will assist the client in verifying the eligibility of entity to get registration as Startup.

Process Of Startup Registration

The process of recognition as a 'Startup' shall be through an online application made over the portal set up by the Indian Government. Entities will be required to submit:

• The online application form
• Certificate of Incorporation/Registration
• Other relevant details as may be sought

Startups also have to submit a write-up about the nature of business highlighting how is it working towards innovation, development or improvement of products or processes or services, or its scalability in terms of employment generation or wealth creation.

Maksim Consultant team will write-up and make high Quality Application for Startup registration.

Profit Tax Exemption

A DIPP recognized Startup shall be eligible to apply to the Inter-Ministerial Board for full deduction on the profits and gains from business, provided:

• It's a private limited company or a limited liability partnership
• Incorporated on or after 1st April 2016 but before 1st April 2021
• Products or services or processes are undifferentiated, have potential for commercialization and have significant incremental value for customers or workflow

The deduction is for any three consecutive years out of seven years from the year of incorporation of startup.

Income Tax Exemption on Angel Investments

A DIPP recognized Startup being a private limited company shall be eligible to apply for exemption from income tax on investments above fair market value made by angel investors (Section 56 of Income Tax Act), provided:

• The aggregate amount of paid up share capital and share premium after the proposed issue does not exceed ten crore rupees
• The investor has:
  • Average returned income of twenty-five lakh rupees or more for the preceding three financial years; or
  • Net worth of two crore rupees or more as on the last date of the preceding financial year
• The Startup has obtained a report from a merchant banker specifying the fair market value of shares

Reduction in Patent Registration Cost

The government provides lists of facilitators for patents and trademarks who offer:

• High quality Intellectual Property Right Services
• Fast examination of patents at lower fees
• Government bears all facilitator fees (startup pays only statutory fees)
• 80% reduction in cost of filing patents

Easy Access to Funding

• 10,000 crore rupees fund set-up by government as venture capital
• Government guarantees to lenders to encourage financial institutions to provide venture capital

Tax Holiday for 3 Years

Startups will be exempted from income tax for 3 years with certification from Inter-Ministerial Board (IMB).

Relaxation in Government Tenders

Startups can apply for government tenders and are exempted from the "prior experience/turnover" criteria applicable to normal companies.

R&D Facilities

Seven new Research Parks will be set up to provide facilities to startups in the R&D sector.

Reduced Compliance Burden

Various compliances have been simplified for startups:

• Self-certification allowed for 9 labour and 3 environment laws
• Saves time and money on regulatory compliance

Tax Saving for Investors

Investors get capital gains exemption when investing in government-recognized venture funds, helping startups attract more investors.

Investor Choice

Startups have the liberty to choose between different venture capitalists.

Easy Exit

Startups can close business within 90 days from the date of application of winding up.

Networking Opportunities

Government holds 2 startup fests annually (nationally and internationally) enabling stakeholders to meet and network.