COMPLETE GUIDE TO START-UP REGISTRATION IN INDIA

The term “start-up” has taken the world by storm, and India is no exception. Thanks to initiatives like Start-up India by the Department for Promotion of Industry and Internal Trade (DPIIT), the Indian start-up ecosystem is booming. DPIIT Start-up registration is a crucial stepping stone for entrepreneurs, as it eases regulatory burdens and offers multiple benefits. This comprehensive guide aims to elucidate the various facets of start-up registration in India, from eligibility criteria to benefits and the registration process itself.

Start-up Registration

Start-up is a word that is extremely popular nowadays. A start-up is a business that basically offers solutions to existing problems of the society in the form of new & reformed products/services.

Thousands of people have started their own start-ups showing a boom in the Indian economy.

start up

 

Objective

The Department for Promotion of Industry and Internal Trade (DPIIT) through Start-up India initiative has executed various projects & undertaken recurring models to propel the Indian Start-up Ecosystem. This initiative aims to build a strong ecosystem for nurturing innovation and promoting Start-ups in the country that will drive sustainable economic growth and generate large-scale employment opportunities. The DPIIT Start-up registration mainly aims to reduce the regulatory burden on Start-ups, allowing them to focus on their core business and keep compliance costs low.

 

Eligibility Criteria

To register under this initiative, there are stringent eligibility criteria in place:

1. Company Age

The period of existence and operations should not exceed 10 years from the Date of Incorporation.

2. Company Type

Shall be incorporated as a

  • Private Limited Company (as defined in the Companies Act 2013) or
  • Registered Partnership Firm (registered under section 59 of the Partnership Act 1932) or
  • Limited Liability Partnership (as defined in the LLP Act 2008)

3. Annual Turnover

Should have an annual turnover not exceeding Rs.100 crore for any of the financial years since its Incorporation

4. Original Entity

Entity should not have been formed by splitting up or reconstructing an already existing business

5. Innovative & Scalable

Should work towards the development or improvement of a product, process or service and/or have a scalable business model with high potential for the creation of wealth & employment.

 

Benefits

Start-ups that successfully register enjoy a myriad of benefits, such as:

1. Self-certify 

Start-ups are allowed to self-certify compliance with 6 Labour Laws and 3 Environmental Laws through a simple online procedure.

2. Easy & quick IPR application

Patent applications filed by start-ups are fast-tracked for examination so that their value can be realised sooner.

 

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3. Rebate of patent application

Also, Start-ups are provided with an 80% rebate in filing patents vis-a-vis other companies. This will help them spare costs in the crucial formative years.

4. Tax exemption under various sections

Eligible start-ups are exempted from paying income tax for 3 consecutive financial years out of their first ten years since incorporation.

5. Exemption under section 56 of Income Tax Act 1961

Consideration of shares received by eligible startups shall be exempt up to an aggregate limit of INR 25 Crore.

 

  • Investments into eligible start-ups by listed companies with a net worth of more than INR 100 Crore or turnover of more than INR 250 Crore shall be exempt under Section 56 (2) VIIB of the Income Tax Act, 1961.

 

  • Investments into eligible Start-ups by Accredited Investors, Non-Residents, AIFs (Category I), & listed companies with a net worth of more than 100 crores or turnover of more than INR 250 Crore, shall be exempt under Section 56(2)(VIIB) of Income Tax Act, 1961.

 

6. Easy winding up of the company

As per the Insolvency and Bankruptcy Code, 2016, start-ups with simple debt structures or those meeting certain income specified criteria can be wound up within 90 days of filing an application for insolvency.

7. Easy public procurement norms

DPIIT recognised start-ups have been exempted from submitting Earnest Money Deposits (EMD) or bid security while filling government tenders. Also, DPIIT Recognized Startups can register on GeM as sellers and sell their products/ services directly to Government entities. This is a great opportunity for start-ups to work on trial orders with the Government.

 

Note

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 of tax holiday for 3 consecutive financial years out of its first ten years since incorporation. You may also read the eligibility criteria for applying for Income Tax exemption under section 80IAC and section 56 of the Income Tax Act 1961 by clicking the links provided below.

 

PROCESS

1. Incorporate your business entity

The first step is to incorporate any one of the abovementioned three entities.

2. Register with DPIIT Start-up India

Go to https://www.startupindia.gov.in/ and create your Start-up India profile using your name, mobile no. , email ID, etc.

3. Register with NSWS

After your profile has been created, log in to your profile and click on “Apply for DPIIT Recognition”. On the next page, click on ‘Apply as Company or LLP’ or ‘Apply as Partnership Firm’. When clicking on the ‘Apply for Company or LLP’ button, it will redirect you to the National Single Window System (NSWS) website. Companies and LLPs should register on the NSWS website and add the form ‘Registration as a Start-up’ to get DPIIT recognition.

4. Fill in the application form

On the ‘Start-up Recognition Form’, you need to fill in the details such as the entity details, office address, authorised representative details, directors/partner details, information required, start-up activities and self-certification and submit the form.

5. Recognition number

On submitting the form, you will get a recognition number immediately and afterwards, upon verification of all your documents, a registration certificate will be issued.

 

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DOCUMENTS REQUIRED

1. A copy of incorporation/registration Certificate of your start-up

2. Authorisation letter of the authorised representative of the company, LLP or partnership firm

3. PAN of the authorised representative

4. Proof of funding, if any

5. A write-up about the nature of the business highlighting how it is working towards innovation, development or improvement of products or processes or services, or its scalability in terms of employment generation or wealth creation like pitch deck/website link/video (in case of a validation/ early traction/scaling stage start-up)

6. Patent and trademark details, if any

7. List of awards or certificates of recognition, if any.

 

Read More: TAX AUDIT UNDER INCOME TAX ACT,1961

 

Registering a start-up in India is not only a legal necessity but also a strategic move to avail numerous benefits that can help your business scale quickly and efficiently. DPIIT’s Start-up India initiative makes this process easier, more transparent, and beneficial for Indian entrepreneurs. Armed with this information, you can confidently take the first step in your entrepreneurial journey.

UNDERSTANDING MSME THE EASY WAY: A COMPREHENSIVE GUIDE

MSME, an acronym for Micro, Small and Medium Enterprises, encapsulates a sector that’s synonymous with growth, innovation, and dynamism in India’s economy. Also known as Small Scale Industries (SSI), this sector has been steadily expanding over the last six decades. The government has played a significant role in promoting MSME through various policies, initiatives, and support mechanisms. The Udyam Registration system, investment classifications, and various incentives reflect an ongoing commitment to fostering growth within this sector.

 

The Uniqueness of MSME

What makes MSME truly stand apart is its multifaceted impact on the country’s socio-economic fabric. Here’s a closer look at the unique aspects:

1. Employment Generation

MSMEs are a major employment engine, providing opportunities across various skill levels. Unlike large industries that require substantial capital investment, MSMEs are more labor-intensive, resulting in employment creation at a lower cost.

 

MSME

 

2. Rural and Backward Area Development

MSMEs are instrumental in rural industrialization. By setting up units in remote areas, they contribute to regional development, alleviating disparities between urban and rural regions. This leads to balanced growth and social inclusion.

3. Complementary to Large Industries

MSMEs are not competitors to large industries but complementary. They often act as ancillary units, supplying essential components, intermediate goods, and finishing tasks, thereby forming a synergistic relationship.

4. Equitable Distribution of Wealth

The decentralized nature of MSMEs ensures a fairer distribution of wealth and income across the country. They promote a more balanced development model by allowing entrepreneurship and innovation to thrive in various regions.

5. Agility and Flexibility

MSMEs are known for their agility and ability to adapt to market changes. Their size allows them to respond quickly to new trends, demands, or shifts in the economy.

 

ELIGIBILITY: MSME Registration

Eligibility for MSME registration is broad, encompassing a variety of business structures. Here’s a detailed look at who can apply:

1. Proprietorship

  • Single owner operating the business.
  • Easiest to set up, with minimal regulatory compliance.

 

MSME

 

2. Partnership Firm

  • Two or more individuals/entities running a business together.
  • Governed by the Partnership Act of 1932, or as a Limited Liability Partnership (LLP) under the LLP Act of 2008.

3. Hindu Undivided Family (HUF)

  • A specific family structure where business is owned and operated by a family.
  • Governed by Hindu Law and offers certain tax benefits.

4. Company

  • Includes Private Limited Companies, Public Limited Companies, One Person Companies (OPC).
  • Governed by the Companies Act of 2013.

5. Trust

  • A non-profit organization or a business entity set up as a trust.
  • Governed by the Indian Trusts Act of 1882.

6. Society

  • Another form of non-profit organization.
  • Governed by the Societies Registration Act of 1860.

7. Any Other Entity

  • Includes Limited Liability Partnerships (LLP), Co-operative Societies, and others.
  • Must fall within the specified threshold limit.

 

MSME Benefits: An In-Depth Look

1. Permanent Registration

  • A one-time process that provides a basic identification number.
  • Offers validity for the life of the enterprise, without the need for renewals.

2. Paperless & Self-Declaration Based Registration

  • Simple, streamlined, online process.
  • Reduces bureaucratic hurdles and encourages transparency.

 

MSMR

 

3. Multiple Activities Under One Registration

  • Flexibility to specify or add various manufacturing or service activities.
  • Encourages diversification and adaptability.

4. Registration on GeM & TReDS Platforms

  • GeM (Government e-Marketplace): Enables participation in government procurement processes.
  • TReDS (Trade Receivables Discounting System): Facilitates financing of trade receivables through platforms like invoicemart.com, m1xchange.com, rxil.in.

5. Access to Government Schemes

  • Credit Guarantee Scheme: Provides financial backing to loans.
  • Public Procurement Policy: Offers preferences in government tenders.
  • Protection Against Delayed Payments: Ensures timely revenue.

6. Eligibility for Priority Sector Lending

  • Preferential access to loans from banks.
  • Boosts financial inclusion and eases credit constraints.

7. Subsidy on Patent Registration

  • Encourages innovation and intellectual property protection.
  • Enhances competitiveness on the global stage.
8. Reimbursement of ISO Certification
  • Supports adherence to international quality standards.
  • Builds credibility and facilitates access to global markets.

9. Collateral-Free Bank Loans

  • Enhances access to finance without stringent collateral requirements.
  • Vital for small and emerging enterprises to grow and scale.

 

 

Required Documents for Udyam Registration 

1. AADHAR Card

The Aadhaar number shall be of the proprietor in the case of a proprietorship firm, of the managing partner in case of a partnership firm, of karta in case of a Hindu Undivided Family, of the authorised representative in case of a Company or a Limited Liability Partnership or a Cooperative Society or a Society or a Trust)

 

MSME

 

2. PAN Card

The PAN shall be of the proprietor in the case of a proprietorship firm, of the managing partner in case of a partnership firm, of karta in case of a Hindu Undivided Family, of the authorised representative in case of a Company or a Limited Liability Partnership or a Cooperative Society or a Society or a Trust.

 

Udyam Registration: A Step-by-Step Guide

Step 1: Navigate to the Udyam Registration Portal
Step 2: Create an Account Using Aadhaar Number
  • An Aadhaar number links the business with its proprietor or authorized representative, ensuring unique identification.
Step 3: Fill in Business Details
  • Name: The legal name under which the business operates.
  • Address: The official location of the business.
  • Type of Organization: Whether the business is a sole proprietorship, partnership, company, etc.
  • Bank Details: Information on the business’s bank account.
Step 4: Provide Investment Details
  • Information about the investment made in plant and machinery or equipment, depending on the nature of the enterprise (manufacturing or service).
Step 5: Upload Required Documents
  • Aadhaar Card: For identity verification.
  • PAN Card: For tax-related purposes.
  • Bank Statement: To verify the bank details provided.
Step 6: Verify and Submit the Application
  • Ensures accuracy and completeness of the information.
  • Submission initiates the verification process.
Step 7: Receive Acknowledgement
  • An acknowledgement with a unique registration number confirms the successful submission.
  • This number can be used to track the application status.

 

MSME
Step 8: Obtain the Registration Certificate
  • After due verification, the registration certificate with the Udyam Registration Number will be issued.
  • This is the final document, providing official recognition as an MSME.

 

 

Read More: APPLICABILITY OF TAX AUDIT TO INDIVIDUAL AND HUF EARNING BUSINESS INCOME

 

 

Understanding MSMEs is pivotal to grasp India’s economic landscape. This comprehensive guide has elucidated the vast scope of MSMEs, their crucial role in the nation’s growth, and the streamlined Udyam Registration process. It acts as a valuable resource for existing and aspiring entrepreneurs, reflecting the dynamic and robust nature of India’s MSME sector. With continual support and incentives from the government, MSMEs are poised for sustained growth and innovation, contributing substantially to India’s global competitiveness.

ALL ABOUT UDYAM REGISTRATION PROCESS

We’ll talk about how Udyog Aadhar registration has been renamed Udyam registration by MSME. The MSME programmes of the Indian government or the governments of your respective states would be available to you once the Udyam has been registered.

 

1. Visit the Udyam Registration website at udyamregistration.gov.in.

 

2. Make your selection under “For New Entrepreneurs who are Not Currently Registered as MSME.”

 

3. To begin the procedure, you should see a form. The process is divided into 8 sections with a total of 25 fields or sub-sections.

 

 

 

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Pre-requisite:

Documents required by the government before applying for a New Registration

 

1. You must have your AADHAR CARD and PAN CARD on hand.

 

2. Proprietor (Proprietorship Firm), Managing Partner (Partnership Firm), or Karta (Hindu Undivided Family Business) cards should be used.

 

3. In the event of a Company, Private Limited, Limited Liability Partnership, Co-operative Society, or Trust, the Authorized Signatory’s Aadhar Number and the Organization’s PAN Number must be supplied.

 

4. Udyam registration requires a GST number. However, for the time being, this is not required because GST numbers are intrinsically connected to PAN numbers and will be obtained from your PAN.

 

5. Income Tax (ITR) data are required for Udyam Registration. However, because they are tied to a PAN number, the PAN information is adequate.

 

 

Section 1: OTP Verification for Aadhar (Fields 1 & 2)

Verifying the applicant’s Aadhar Number and Name against their Aadhar card is the initial step. The applicant must be the organization’s principal and authorized signatory.

 

An OTP will be issued to the mobile number associated with the Aadhar Card once the details have been entered and the VALIDATE & GENERATE OTP button has been clicked.

 

 

Section 2: VERIFICATION of Pan (Fields 2, 3 & 4)

The next step is to confirm your PAN CARD after providing your Aadhar Number. After the PAN card has been verified, submit information on whether you have filed your most recent ITR and whether your organization has registered for a GSTIN.

 

 

Section 3: Applicant Details (Fields 5 – 10)

This part compiles the applicant’s Basic Information. Information about the organization, applicant information, and contact information are included.

 

 

Section 4: Organization Location (Fields 11, 12 & 13)

The location and address where the organization’s and its execution centers conduct business.

 

 

Section 5: Other Organization Details (Fields 14-19)

This section gathers all further information about the organization, including its founding dates, previous registration information, status, the number of employees, the type of business, and the NIC codes for all of its goods and services.

 

 

Section 6: Investment Criteria of the Organization

The investments made for the organization’s capital assets are described in this section. If the PAN is linked, this information is taken from the ITRs 3, 5, and 6, otherwise it must be self-declared.

 

 

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Section 7: Other Details (Fields 22, 23 & 24)

These are additional information to contact with public and governmental authorities. The majority of them are Yes/No questions, and depending on the owner’s desire, they are recorded.

 

 

Section 8: Acceptance and Generation of E-Certificate

Final approval of the submitted paperwork is required in order to obtain the final OTP needed to produce the ecertificate.

 

 

Read More: LINK YOUR PAN TO AADHAAR OR FACE CONSEQUENCES – HERE’S WHAT YOU NEED TO KNOW

 

 

Eligibility:

The Udyam registration certificate can be obtained by any business entity that satisfies the minimum turnover and investment (in equipment and machinery) requirements for MSMEs in India. The following table lists the requirements for a company to be considered an MSME in India:

 

 

[table id=46 /]

 

 

 

The Udyam registration programme is a helpful one for India’s small and medium-sized businesses. Businesses who sign up for Udyam can take advantage of a number of advantages, including as access to government programmes and incentives, bank loans and credit facilities, protection against payment delays, quicker dispute resolution, and improved marketability and visibility.