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Requirements for getting benefits

Start-ups, housed as company, LLP or traditional partnership firms are necessarily required to apply for recognition with the Department of Promotion of Industry and Internal Trade (DPIIT) for availing themselves of benefits such as self-certification, reduced compliance requirements under environmental and labour laws, fast tracking of patent applications along with IPR protections, easier winding up and public procurement norms etc.

Start-up recognition by the DPIIT is based on specified criteria such as date of incorporation, turnover and business activities. Additionally, income tax benefits, DPIIT recognised startups must obtain a certificate from the Inter-Ministerial Board (IMB), of DPIIT.

Traditional partnership firm

A traditional partnership firm recognised as a start-up can avail itself of benefits provided by the Indian Government under Start-up India program. DPIIT grants startup recognition to traditional partnership firms as well, if it meets the required criteria.

However, income tax holiday for start-ups and deferral of tax on ESOPs are available only upon obtaining a specific certificate from the IMB, which is granted to start-ups incorporated as private limited company or LLP.

Nevertheless, a recognised start-up housed as a traditional partnership firm can get exemption from angel tax, subject to specific conditions of the DPIIT.

Start-up incorporated abroad

An entity incorporated outside India is not eligible for benefits under the Start-up India program. Start-up recognition is granted by the DPIIT only to those entities which are incorporated in India as a company or registered in India as traditional partnership firm or LLP. A start-up set up abroad cannot avail itself of benefits given to Indian start-ups even if it has major operations in India. However, such foreign startups can register on Startup India Hub for interacting and exchanging information with other start-ups.

MSME start-up

MSME registration is provided based on investment and turnover limits, whereas start-up registration is provided to eligible organisations specifically based on their engagement in innovation, development or improvement of products, processes or services or having a scale-able business model with a high potential of employment generation or wealth creation. Any MSME fulfilling the criteria under start-up regulations can obtain both registrations in tandem.

Using ‘Startup India’ logo

The use of “Startup India” logo is allowed to any organization only with the prior approval of the DPIIT, for events organized to promote Start-up India initiative of the Government. Organisations are required to file an application with details of the event/programmes for use of logo in the prescribed form on Startup India Hub. Applications for use of logo on electronic and social media are required to be furnished at least 30 days in advance for consideration and approval by the DPIIT.

(The writer is a partner at Nangia Andersen LLP)

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