Introduction
India has seen a notable increase in the number of startups in the decade preceding the present due to a rise in the country’s entrepreneurial spirit and government programs that support economic development and innovation. On the other hand, for startups to succeed in the Indian market, they must successfully navigate the legal environment. The main legal requirements and issues that Indian entrepreneurs need to be aware of are covered in this article.
Government’s Eligibility Criteria for Startup Recognition
- The Government of India has special requirements for startup recognition in addition to the basic eligibility criteria. These requirements include:
- registering as an LLP, partnership, or private limited company.
- restricted turnover in any prior fiscal year of less than INR 100 crores.
- The initial status is good for ten years following the incorporation date.
- Pay attention to innovation, ways to improve products, services, or processes, and opportunities to create jobs and money.
- The Inter-Ministerial Board’s certification was created to acknowledge startups.
- Organisations formed by a division or rebuilding of an already-existing firm are not included.
Registration as a Start-up
It is crucial to register your startup with the government after registering your business to receive tax deductions and other benefits provided by government initiatives. To register as a start-up in India, you must first fulfill the requirements outlined in the most recent government policy previously stated under GSR 127(E). After that, you must take the following actions:
Step 1: Creating an Account and Registering.
The procedure is really easy to complete according to the government, and it can be done online. Visit StartupIndia.gov.in and register or create a new account. After that, select DPIIT recognition by reaching for the schemes and policies option.
Fill out the application after making sure you meet all the conditions to be acknowledged legally as a start-up.
Step 2: Required Documentation.
You need to upload several documents to the website. that to determine whether your start-up is credible enough to receive the DPIIT Recognition. All of these documents have to be genuine and in PDF format. If the inspection reveals any document fabrication or falsification, a substantial fine of 25,000 rupees would be imposed.
Required document list:
- Your company’s certificate of incorporation or registration should have been sent to you once it was registered under the appropriate statute based on the type of business. Using the certificate, you meet the requirements.
- A letter of funding, if any, endorsing the innovative character of the firm and providing at least 20% in equity from an Incubation Fund, Private Equity Fund, Angel Fund, Accelerator, or Private Equity Fund registered with SEBI.
- A recommendation letter: This is to evaluate how worthy your innovation is. Any of the following recommendation letters are acceptable to bring.
- A letter of recommendation in the DIPP-approved format from an incubator that is well-known at an Indian postgraduate college. This relates to the company’s inventive nature; OR
- A letter of reference from an incubator funded by the Indian government as part of a designated program to foster innovation; OR
- A letter from any incubator recognized by the Indian government in the DIPP format. a suggestion made thereafter by the Indian Central or State Governments; OR
- a patent that has been submitted and published in the Indian Patent Office Journal covering topics related to the type of business being promoted, if any. In some circumstances, this might also serve as a letter of recommendation.
- Proof of Concept: This could be a working product prototype, a website, or a sample film that demonstrates the utility and originality of the idea behind the founded start-up.
- Awards or Certificates if any.
- PAN Number: If your startup is a corporation with multiple members, a company PAN number is necessary for all transactions and to receive tax benefits. If you are a lone proprietor, an individual PAN number will suffice.
Conclusion
A sound knowledge of all the legal intricacies in starting and managing startups can help a long way to scale up the startups which will in turn result in the overall growth of the Indian economy.
We are a law firm in the name and style of Law Offices of Kr. Vivek Tanwar Advocate and Associates at Gurugram and Rewari. We are providing litigation support services related to law matters in India, please do not hesitate to contact us. We are here to provide you with expert legal counsel and representation tailored to your specific needs and concerns.
Written by: Avichal Singhal Adv.