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Five year Anniversary START-UP INDIA Initiative Scheme

After Five years completion The Scheme was announced during the ‘Prarambh: Start-upIndia International Summit’ which marked the five-year anniversary of the Start-up India initiative Start-up India Initiative:

The Start-up India initiative was announced by Hon’ble Prime Minister of India on 15th August, 2015. The flagship initiative aims to build a strong eco-system for nurturing innovation and Start-ups in the country that will drive sustainable economic growth and generate large scale employment opportunities. Further to this, an Action Plan for Start-up India was unveiled by Prime Minister of India on 16th January, 2016. The Action Plan comprises of 19 action items spanning across areas such as “Simplification and handholding”, “Funding support and incentives” and “Industry-academia partnership and incubation”. Government of India has made fast paced efforts towards making the vision of Start-up India initiative a reality. Substantial progress has been made under the Start-up India initiative, which has stirred entrepreneurial spirit across the country.

The Department for Promotion of Industry and Internal Trade (DPIIT) is mandated to coordinate implementation of Start-up India initiative with other Government Departments. Apart from DPIIT, the initiatives under Start-up India are driven primarily by five Government Departments viz. Department of Science and Technology (DST), Department of Bio-technology (DBT), Ministry of Human Resource Development (MHRD), Ministry of Labour and Employment and Ministry of Corporate Affairs(MCA) and NITI Aayog. Since the launch of initiative in January 2016, there has been a substantial progress under Start-up India Action Plan. Many other initiatives beyond the Start-up India Action Plan have been undertaken for development of overall growth of Start-up movement in the country.

Benefits Provided under Start-up India
• Simple process. The government of India has launched a mobile app and a website for easy registration for Start-ups
• Reduction in cost.
• Easy access to Funds.
• Tax holiday for 3 Years.
• Apply for tenders.
• R & D facilities.
• No time-consuming compliances.
• Tax saving for investors.

Start-up Recognition:
Under the Start-up India Action Plan, Start-ups that meet the definition as prescribed under G.S.R. notification 127 (E) are eligible to apply for recognition under the program. The Start-ups have to provide support documents, at the time of application.

Eligibility Criteria for Start-up Recognition:
a. The Start-up should be incorporated as a private limited company or registered as a partnership firm or a limited liability partnership
b. Turnover should be less than INR 100 Crores in any of the previous financial years
c. An entity shall be considered as a Start-up up to 10 years from the date of its incorporation
d. The Start-up should be working towards innovation/ improvement of existing products, services and processes and should have the potential to generate employment/ create wealth. An entity formed by splitting up or reconstruction of an existing business shall not be considered a "Start-up".

Start-up India: 80 IAC Tax exemption:
Post getting recognition a Start-up may apply for Tax exemption under section 80 IAC of the Income Tax Act. Post getting clearance for Tax exemption, the Start-up can avail tax holiday for 3 consecutive financial years out of its first ten years since incorporation.

Eligibility Criteria for applying to Income Tax exemption (80IAC):
a. The entity should be a recognized Start-up
b. Only Private limited or a Limited Liability Partnership is eligible for Tax exemption under Section 80IAC
c. The Start-up should have been incorporated after 1st April, 2016.

Start-up India: Tax Exemption under Section 56 of the Income Tax Act (Angel Tax)
Post getting recognition a Start-up may apply for Angel Tax Exemption. Eligibility Criteria for Tax Exemption under Section 56 of the Income Tax Act: a. The entity should be a DPIIT recognized Start-up Aggregate amount of paid up share capital and share premium of the Start-up after the proposed issue of share, if any, does not exceed INR 25 Crore. Start-up India Seed Fund Scheme 2021 In order to build a robust Start-up ecosystem, the Government of India has launched Start-up India Seed Fund Scheme on 16th January 2016 so that opportunities will be provided to entrepreneurs to grow their enterprise. The announcement to launch this scheme was made by our honorable Prime Minister Mr. Narendra Modi. Through this scheme financial assistance up to Rs, 50 lakh will provide to the Start-ups at the early stage through incubators. The government has allocated a budget of Rs 945 crore for this scheme. This fund will use for proof of concept, prototype development, product trial, Market entry, and commercialization. Under this scheme, the Government is going to provide funds to incubators. The incubator will be responsible to further provide these funds to the Start-ups. 3600 entrepreneurs through 300 incubators will benefit from the Start-up India seed fund scheme in the next 4 years.

About Incubators
Incubators are the organizations that work to promote innovation and entrepreneurship among citizens. They basically provide funds and their infrastructure to the Start-ups so that they can carry out their business activities of development, product trial, market entry, commercialization, etc. The government provides incentives to the incubators and the incubators will further provide funds to the Start-ups. Under the Start-up India Seed Fund Scheme 2021, the government is going to provide a grant to 300 incubators. The funds provided to the Start-up under this scheme will be up to Rs 50 lakh. The incubators can apply under the Start-up India seed fund scheme through the official portal. After verifying their application the government will grant them the seed fund. The Start-ups can also apply under this scheme directly from the portal and from there they can select the incubators of their choice according to their preference.

• With the Indian government launching various schemes to promote small scale industries in India, local businesses have been mushrooming all over the country with many Start-ups making huge impacts in the past few years. But it’s not easy, there are abundant problems faced by entrepreneurs.
• While companies like Paytm and Flipkart are an example of what a Start-up can achieve in a few short years, there are certain problems that almost all entrepreneurs face while starting out.

Recently, the Government has launched the Start-up India Seed Fund Scheme (SISFS).
o Aim: To provide financial assistance to Start-ups for proof of concept, prototype development, product trials, market entry, and commercialization.
o Launched by: Department for Promotion of Industry and Internal Trade (DPIIT) with an outlay of Rs. 945 Crore.
o Some Eligibility Conditions:
• A Start-up, recognized by DPIIT, incorporated not more than 2 years ago at the time of application.
• Start-ups should not have received more than Rs. 10 lakh of monetary support under any other Central or State Government scheme. o Features:
• It will support an estimated 3,600 entrepreneurs through 300 incubators in the next 4 years.
• An Experts Advisory Committee (EAC), constituted by DPIIT, will be responsible for the overall execution and monitoring of the Scheme.
• Grants of upto Rs. 5 crore will be provided to the eligible incubators selected by the committee.
• The selected incubators will provide grants of up to Rs. 20 lakh for validation of proof of concept, or prototype development, or product trials to Startups.
• Investments of up to Rs. 50 lakh will be provided to the Start-ups for market entry, commercialization, or scaling up through convertible debentures or debt-linked instruments.
o Expected Benefit:
• It will help in creating a robust Start-up ecosystem in Tier 2 and 3 regions, as the smaller towns in India are often not provided with appropriate funding.

About Start-up India Initiative:
o It envisages building a robust Start-up ecosystem in the country for nurturing innovation and providing opportunities to budding entrepreneurs. It was launched in 2016.
o The action plan of this initiative focuses on following three areas:
• Simplification and Handholding.
• Funding Support and Incentives.
• Industry-Academia Partnership and Incubation.

Related Government Initiatives:
o Start-up Innovation Challenges: It is a fantastic opportunity for any Start-up to leverage their networking and fund-raising efforts.
o National Start-up Awards: It seeks to recognize and reward outstanding Start-ups and ecosystem enablers that are contributing to economic dynamism by spurring innovation and injecting competition.
o Ranking of States on Support to Start-up Ecosystems: It is an evolved evaluation tool aimed to strengthen the support of States and UTs to holistically build their Start-up ecosystems.
o SCO Start-up Forum: The first-ever Shanghai Cooperation Organisation (SCO) Start-up Forum was launched in October 2020 to develop and improve Start-up ecosystems collectively.
o Prarambh: The ‘Prarambh’ Summit aims to provide a platform to the Start-ups and young minds from around the world to come with new ideas, innovation and invention.

Seed Funding
It typically represents the first official money that a business venture or enterprise raises. It helps a company to finance its first steps, including things like market research and product development. There are many potential investors in a seed funding situation: founders, friends, family, incubators, venture capital companies and more. One of the most common types of investors participating in seed funding is a so-called "angel investor."
Angel investors tend to appreciate riskier ventures (such as Start-ups with little by way of a proven track record so far) and expect an equity stake in the company in exchange for their investment. Department for Promotion of Industry and Internal Trade. The department was earlier called Department of Industrial Policy & Promotion and was renamed as DPIIT in January, 2019. It comes under the Ministry of Commerce and Industry.

In 2018, matters related to e-commerce were transferred to the Department and in 2019, the Department was given charge for matters related to Internal Trade, welfare of traders and their employees and Start-ups. The role of DPIIT is to promote/accelerate industrial development of the country by facilitating investment in new and upcoming technology, foreign direct investment and support balanced development of industries. For additional information about Start-up India or any further clarification, Start-up India website may be accessed at www.Start-upindia.gov.in.