The Government of India under its flagship programme “Startup India” introduced the concept of an “Eligible Startup”. A Startup that fulfils criteria’s (more shared below) as laid down in its Notification dated 19th February, 2019 would be recognised as an “Eligible Startup” and would be entitled to benefits announced by government under various programmes, schemes and regulations.

Which type of entities can apply for “Eligible Startup” ?
Entities incorporated as :
1. Private Limited Company or
2. Limited Liability Partnership (LLP) or
3. A Registered Partnership Firm

What are the criteria for application as an “Eligible Startup” ?
Below are the 3 criteria for applying as an “Eligible Startup”

Who grants the recognition ?
The Department for Promotion of Industry and Internal Trade (DPIIT) earlier known as DIPP Department of Industrial Policy and Promotion (DIPP) is the authority that grants the Startup India recognition to a startup by way of a PDF Certificate.

When does a Startup cease to be an “Eligible Startup” ?
A startup ceases to be an Eligible Startup when it no longer fulfills the above the criteria or the startup is an entity formed by splitting up or reconstruction of a business already in existence.

What are the benefits of an “Eligible Startup” ?
There are tax, regulatory and other benefits for Eligible Startups. We’ll share more in our upcoming posts. Here’s a summary :

What is the process for registration as an Eligible Startup ?

  1. Register on www.startupindia.gov.in

  2. Apply for recognition as an “Eligible Startup”

    Initiate an application for recognition as an “Eligible Startup” on the portal

  3. Submit a write up about the nature of business of your startup

    Write up to cover how the startup is working towards innovation, development or improvement of products or services or scalability in terms of employment generation or wealth creation.

  4. Submit the online application along with details required and fill in the questionnaire

  5. Receive DIPP Recognition Certificate over your registered email ID.
    Here’s what the certificate looks like

    DPIIT Certificate

Demystifying DPIIT Recognition myths !

Myth 1 : DPIIT Recognition entitles Startup to Income Tax exemption as well ! (i.e No tax on 3 out of 10 years profits)

No, there is a separate online application for claiming income tax exemption (deduction in tax language) on profits through Form – 1. (called the 80-IAC Application)
We’ll share more on this in our future posts.

Myth 2 : DPIIT Recognition entitles Startup to Angel Tax Exemption (i.e No tax on premium on investment rounds)

No, there is a separate online application for claiming angel tax exemption through Form – 2.
We’ll share more on this in our future posts.

Myth 3 : DPIIT Recognition entitles Startup to
(a) ESOP Tax Deferral Exemption (i.e Income Tax deferral on ESOPs)
(b) Capital Gains exemption for Investors
(c) Set off and Carry forward of losses

No, only startups that have the 80-IAC Recognition are entitled to these benefits.

So should your startup apply for DPIIT Recognition ?
Yes !

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