Company Registration

How to Register a Startup Company in India?

calendar28 Feb, 2024
timeReading Time: 4 Minutes
Register a Startup Company

As per the Department for Promotion of Industry and Internal Trade (DPIIT), a startup is defined as an organisation that is less than ten years old and has a net turnover of less than Rs. 100 crores, and is engaged in the development of new products or technologies, innovation in new products and services or existing ones, improvement of existing goods, services, and technologies deployment, or commercialisation of goods, services, or processes that have a scalable business model. Furthermore, the Companies (Amendment) Act, 2015 has done away with the requirement of having a minimum paid-up capital for companies, hence easing the incorporation and process to register a startup company.

Eligibility for Startup registration in India

In order to be eligible to register a startup company, an enterprise must satisfy certain requirements as laid down by the DPIIT. The proprietor or owner of the enterprise applying for a startup registration must be at least 18 years of age.  The company must be a Private Limited Company or Limited Liability Proprietorship (LLP), and its annual turnover shall not exceed Rs. 25 crores annually. Furthermore, the Startup must not have been formed as a result of restructuring, merging-demerging or amalgamating any already existing business or enterprise.

Furthermore, the enterprise going to register a startup company must not be more than five years old and, most importantly, shall be involved in pursuing the invention, creation, implementation, or marketing of a novel good or service that is inspired by intellectual property or technology.

As part of the regulatory framework and oversight, the Startup shall obtain required clearance and permits from market regulators and regulatory bodies, such as the SEBI, DPIIT, State/Central Government, Patent and Trademark Office, etc.

What is the process to register a startup company?

The process to register a startup company in India is mentioned below:

Step 1 – Business Incorporation

The first step to register a startup company is to incorporate a business entity, which shall be the basis of the startup company. For the purpose of selecting the appropriate business structure for startup registration, the following incorporation: Limited Liability Partnership (LLP), Partnership Firm or Private Limited Company. Obtain the Certificate of Incorporation/Partnership registration and submit the registration application in accordance with the regular processes for business registration. The Startup shall register its business as a Company or LLP by making an application with the concerned local Registrar of Companies (ROC).

Step 2 – Registration with Startup India 

In order to get recognised as a startup, the entity must register itself with the Startup India Initiative by logging on to the startup India website. Startup India initiative was launched by the Government of India in 2016 as a public policy initiative to bolster startups and small/medium enterprises by providing them with simplified registration and benefits. Registration under DPIIT is also a very simplified process, made easier through online registration.

Step 3 – Submission of Documents

The process to register a startup company requires certain documents that are needed to be filed with the statuary authorities, such as a certificate of incorporation certificate, AOA, MOA, LLP/Trust Deed, PAN, AADAR and residential details of the members of the Startup, Details of Intellectual Property – Copyright, Trademark or Patent filed in the name of the Startup et and letter of authorisation from the members of the enterprise.

Step 4 –Certificate of Registration from DPIIT

After submitting the application form and relevant documents, the company shall wait for verification. After authorising and examining the documents and application, the ministry will analyse your application for startup registration and any supporting documentation before looking into the data. A special startup recognition number will be provided by the ministry upon approval. This number is required in order to take advantage of tax breaks and other incentives offered to accredited startups. The certificate of recognition by the DPIIT is released two days after the submission of all the details.

Benefits of Startup Registration in India

Startup registration in India plays an important role in the solidification of a business’s legal identity in India. The various benefits that a startup can avail by registering itself with the regulatory authorities are –

1. Protection of Intellectual Property Rights

Another benefit to registering a startup company is that the intellectual property of the company – trademark, copyright, patents, and designs receives legal protection from infringement and unauthorised use. IPR registration charges for startups have been incentivised and made available to entities at less expensive prices as compared to other business structures.

2. Tax Exemptions

Startup registration makes a business eligible for various tax exemptions and rebates available to small-scale industries by the government. Recently, startups have been removed from the ambit of several medium taxes and charges, such as the angle tax, which is applicable on the sale or purchase of securities by startups above the fair market value, exemption from minimum alternative tax, and tax on long-term capital gains, choice of tax treatment and block-based tax holidays. These are all the benefits available to startups who wish to Register a Startup Company.

3. Increases Reliability in the Market

After an entity registers a startup company as per the DPIIT framework, the business is seen as credible and enjoys reliability in the market. It demonstrates your commitment to your company and your completion of the required procedures to guarantee its validity and legality.

4. Exemption From environmental compliances 

Any business, before incorporation, requires several types of environmental clearance from the Central and State Pollution Control Boards. They are not required to apply for and obtain permits known as Consent to operate and Consent to Establish (CTE) in order to set up business activities as other big and medium-sized industries are.

Conclusion

When you register a startup company in India, you are eligible for a number of benefits and incentives, as opposed to regular businesses. DPIIT has introduced and incentivised the concept of startup registration in India to promote entrepreneurship and boost foreign direct investment. The process of startup registration has also been simplified and made easier in order to allow small businesses to expand and take advantage of government schemes. Startup registration can help businesses avail a wide array of benefits, such as tax exemptions, easy incorporation, funding, and winding-up mechanisms. Also, Startups are eligible for higher thresholds on investment through alternative investment funds and can apply for tax exemption under section 80IAC of the Income Tax Act of 1961.

Frequently Asked Questions (FAQs)

  1. What is considered a startup by the DPIIT?

    The Department for Promotion of Industry and Internal Trade (DPIIT) defines a startup as an organisation that is involved in the development, innovation, deployment, or commercialisation of products, services, or processes with a scalable business model and is less than ten years old. A startup of this kind should also have a revenue of no more than Rs. 25 crores.

  2. Can a startup be incorporated as any business structure?

    No, as per the DPIIT guideline, the Business Structures available to Register a Startup Company for the purpose in India are a limited Liability Partnership (LLP), a Partnership Firm, and a Private Limited Company.

  3. What are the Documents required to be filed?

    As part of the process of Startup registration in India, a unique name must be chosen and approved, the Digital Signature Certificate (DSC) and Director Identification Number (DIN) must be obtained, the Memorandum of Association (MOA) and Articles of Association (AOA) must be drafted, and lastly, the company must file for incorporation with the Registrar of Companies (ROC).

  4. Where should one go in order to Register a Startup Company in India?

    In order to register a startup company in India, an applicant must visit the Startup India Website of the Department for Promotion of Industry and Integral Trade (DPIIT).

  5. What documents are required to fulfil the Legal requirements to register a company in India?

    Certain documents are required to register a company in India, including evidence of identification, proof of address, PAN card, proof of registered office address, MOA, and AOA. Furthermore, the kind and quantity of documents may change depending on the legal framework that is selected.

  6. What are the compliance and legal requirements for startup registration in India?

    After registration, startups must adhere to a number of legal obligations, including keeping accurate records of finances, holding yearly general meetings, filing annual reports, and paying taxes, including income tax and GST.

  7. How can a startup's intellectual property (IP) rights be protected?

    Startups can safeguard their intellectual property rights by registering trademarks for their names and logos, patents for their discoveries, copyrights for their creative works, and designs for their products. They can do so by registering their intellectual property under various IP protection laws. Startups are also eligible for a fee discount when registering their intellectual property.

  8. Is it possible for an established company to register on the Startup India Portal and Mobile App as a “Startup”?

    Yes, an existing organisation can visit the Startup India webpage and mobile app to get recognised for several advantages if it satisfies the requirements of a startup as converted in point 1

  9. Can a foreign company register as a startup under the Startup India Initiative?

    Yes, foreign companies can be registered in India under the Stratup India Initiative, provided the company has at least one subsidiary or registered office in India. 

  10. What tax exemptions do Startups Enjoy under Startup registration?

    Startup registration makes a business eligible for various tax exemptions and rebates available to small-scale industries by the government. Recently, startups have been removed from the ambit of several medium taxes and charges such as the angle tax, exemption from minimum alternative tax, tax on long-term capital gains, choice of tax treatment, and block-based tax holidays.

  11. What is Angel Tax Exemption for Startups?

    Angel tax is a cess which is applicable on the issuance of shares beyond fair market value by the startups. Such tax is no longer applicable to startups.

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