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Business Startup / Business Tips / Schemes & Subsidies in India / starting a new business / Startup News / Subsidies & Schemes / Taxation

Startups Eligible for Startup India Exemptions

Startups eligible under Startup India Initiative

Startups Eligible for Startup India Exemptions

Prime Minister Shri Narendra Modi on 16th January, 2016 announced a slew of programs, incentives and exemptions for Startups in India. The flagship Startup India initiative announced by the Prime Minister is aimed at creating a strong and vibrant startup eco-system in India and to create a culture of Entrepreneurship. In this article, we look at a startup eligibility criteria for the Startup India program. The highlights of the Startup India Action Plan can be read here.

“Startup” Definition as per the Startup India Action Plan

The Startup India Action Plan defines “Startup” as an entity, incorporated or registered in India not prior to five years, with an annual turnover not exceeding Rs.25 crores in any preceding financial year, working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property.

Provided that such entity is not formed by splitting up, or reconstruction, of a business already in existence.

Provided also that an entity shall cease to be a Startup if its turnover for the previous financial years has exceeded INR 25 crore or it has completed 5 years from the date of incorporation/ registration.

Provided further that a Startup shall be eligible for tax benefits only after it has obtained certification from the Inter-Ministerial Board, setup for such purpose.

Startups Eligible for Startup India Incentives

The Startup India Action Plan has stated that only Private Limited Companies, Limited Liability Partnership and Registered Partnerships are eligible for the Government schemes. Those Companies, LLPs and Registered Partnerships registered even before the announcement are eligible and it is best for Entrepreneurs starting a new business hereon-forth to register a Private Limited Company or Limited Liability Partnership or Registered Partnership.

Startups Eligible for Startup India Tax Exemptions & Incentives

A business is considered to be a startup under the Startup India Action Plan if it aims to develop and commercialize:

  • New product or service or process;
  • Significantly improved existing product or service or process, that will create or add value for customers or workflow.

Further, in order for a “Startup” to be considered eligible, the Startup should:

  • Be supported by a recommendation (with regard to innovative nature of business), in a format specified by DIPP, from an Incubator established in a post-graduate college in India; or
  • Be supported by an incubator which is funded (in relation to the project) from GoI as part of any specified scheme to promote innovation; or
  • Be supported by a recommendation (with regard to innovative nature of business), in a format specified by DIPP, from an Incubator recognized by GoI; or
  • Be funded by an Incubation Fund/Angel Fund/ Private Equity Fund/ Accelerator/Angel Network duly registered with SEBI that endorses innovative nature of the business;
  • Be funded by GoI as part of any specified scheme to promote innovation;
  • Have a patent granted by the Indian Patent and Trademark Office in areas affiliated with the nature of business being promoted.

Startups NOT Eligible for Startup India Action Plan

The mere act of developing of products or services of the following nature DO NOT make an entity eligible for incentives:

  • Products or services or processes which do not have potential for commercialization; or
  • Undifferentiated products or services or processes; or
  • Products or services or processes with no or limited incremental value for customers or workflow.

Obtaining Startup Tax Exemption under the Startup India Initiative

Startup would be eligible to obtain tax benefits only after it has obtained certification from the Inter-Ministerial Board, setup for such purpose. The Inter-Ministerial Board setup by DIPP would validate the innovative nature of the business for granting tax related benefits. However, approval from the Inter-Ministerial Board shall not in any manner, limit or absolve the Startup from any liability incurred in case of any misrepresentation/ fraud arising from submission of such application and/ or supporting such application.

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33 Comments

  1. I have an existing proprietorship business… Manufacturing & service sector.. I wish to expand by buying more machines etc… Can Start up India help me by funding etc???

  2. Also I am interested in opening up of Hotels, Resorts… As I have land resources situated at commercial areas… Could you suggest some options

  3. Dear sir.
    i am also interested to start a business. my product is soft play toys ,which is not manufacturing in India. so please guide me how can i start a business under the start up scheme.
    Thanks Regards,
    Rohidas Kumkar

  4. i am interested in this plan but i dont know how to apply
    could you suggest me ???

  5. I am not able to locate the FORM by DIPP for Startup certification.
    Request you to help me with this

  6. Hi shubham ,Please call our business advisors @ 04440247777.

  7. i m a specialist doctor n want to expand my hospital network with reach upto rural areas.
    is it possible to start under startup india?

  8. Hi Sir/Mam,
    I need loan from my start up business. I want to start a ‘atta chakki’ plant. Rigth now I’m working in a IT Company as software developer. Please please suggest me where and how to apply for loan. What is the process for it and who many amount given by bank. What is document is required. Please reply must.

  9. we have started a partnership in jan-10th. we have idea for innovative product productions. so how can we apply to start up.

  10. HI MY FRIEND WANTS TO START SPORTS EVENT MNGMNT COMPANY N WILL BE ORGANISING SPORTS TOURNAMENTS BUT HE LACKS FUNDS? IS HE ELIGIBLE

  11. Hi Sunder,
    you can discuss this with our Business Advisors. Please contact 04440247777

  12. I AM A SOLE PROPRIETOR OF MY EVENT COMPANY ESTABLISHED 6 MONTHS BACK. DO I FALL IN A THIS STARTUP CATEGORY?

  13. Hi,
    I want to start a business of disposable items like paper cups, plate, spoons, paper bags, etc.
    I need funding for this business and proper guidance from expert regarding registration. How can Indiafiling help me with this?

  14. I am doing computer service and printer head recondition.Now i am try to manufacture adapters for laptop and printers.my company is not a registered company.can you inform whether i am elgible to get loan in start up india.
    pls inform age limit also
    R.sudha

  15. Hi Sudha,
    There is certain procedures to get a loans if you are applying through proprietorship you are eligible to get loans and also you should submit your company documents for security like “bank transaction details, income tax report..”. best thing i can suggest you to register your company then you will get lots of benefits.for that please call our business advisors @ 04440247777 they will explain you all registration and loan procedures.

  16. Hi Vishal ,
    Proprietorship company will not comes under startup scheme, for the further details please call our business advisors @ 04440247777

  17. Hi saraswat,
    Private limited company is comes under the startups scheme, need to know more about you company please call our business advisors @ 04440247777. they can explain the rules and regulations

  18. Hi i have opened a restaurant NOW (Registered as LLP ) and i make sandwich, Burger and Salads There. Whether i am eligible as a start up ??

  19. what are the liabilities of the founderdirectors after selling a private limited company , registered in delhi.
    Company was incorporated in 2013 , Current Account was opened on date 30 March 2015 , First business transaction was carried out on 29 th june 2015. sales tax no and service tax no was applied and was alloted in april 2015 . all the sales tax returns and service tax returns are filled up till march 2016 ..
    as company is stilll not doing good volume of business . and the expenses are not meet . i want to sell ths company ,,, pls guide .

  20. Hi Prakash,
    It’s our pleasure to help you I think it is better to have a telephonic conversation with our business adviser,please call our advisors @ 04440247777.

  21. I have exiting auto parts manufacturing pvt.ltd.i wish make a businesman but i have no idea auto parts businss so halp me statup india

  22. Kalesh,
    It’s our pleasure to help you I think it is better to have a telephonic conversation with our business adviser,You can reach us through this number 04440247777.

  23. I have to start a dairy farm for milk purpose and also to protect indeginious breed of desi cow like Gir cows. how can I take benefits of statrtup India to serve my mission.

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