Legal Guide

What are the Benefits of the Startup Scheme?

by ezyLegal Editor · 2 min read

benefit of startup scheme

Startup culture is rapidly growing in India, and the Government of India has recognised the potential within this trend. To help startups grow and contribute further to the economy, the Government has created the Startup India Scheme, which aims to increase employment, promote economic growth through startups, and create innovation in goods and services. Startups have to achieve DPIIT registration to access the benefits of the Startup scheme. This can be done through the Department for Promotion of Industry and Internal Trade.

Benefits of the Startup scheme

The benefits of the Startup scheme are as follows:

  1. Tax exemption: A major benefit of the Startup scheme is that the startups registered under the scheme can avail a tax exemption for an initial period of 3 years. Investments made by incubators and angel investors are also exempted from taxation if they are of a higher value than the market value. This benefit of the Startup scheme allows the startup to completely focus its funds on growth and development. Although, in the short-run, this is detrimental to the Government, a successful startup would eventually pay far more, and their prosperity would compensate for this gap in taxation. 
  2. Self-certification: All companies are required to comply with labour and environmental laws. Failure to comply with these laws results in penalties for the company. However, it is difficult for startups to comply with these guidelines as they would have to sacrifice their growth at an early stage for it. To solve this, another benefit of the Startup scheme is that startups are allowed to self-certify their compliance with nine labour and environmental laws for a period of 3 years. This reduces their liability as far as these laws are concerned, and this benefit of the Startup scheme helps facilitate early growth. 
  3. Networking opportunities – Another important benefit of the Startup scheme is that it provides entrepreneurs with networking opportunities. Fests are conducted semi-annually where conversations between startups and investors are facilitated by the scheme to help the former acquire funding for their company. An additional benefit of the Startup scheme in this regard is that it allows startups to get guidance from experienced parties, and it allows them to observe how other startups are doing in similar conditions.
  4. Easy registration – Another benefit of the Startup scheme is that startups can register themselves quickly and easily through the Startup India mobile app. In most other scenarios, registration processes are complex and require a lot of documentation. However, this benefit of the Startup scheme allows startups to register themselves at their own convenience. This registration only requires a single form, which makes it significantly more convenient. In this way, startups are incentivised to utilise the Startup India scheme.
  5. Incubator model – The Startup India scheme promotes the notion of incubators. It encourages public-private partnerships wherein new startups are allowed to reside in low-cost or no-cost housing in exchange for a percentage of the company being formed. This is a benefit of the Startup scheme as it gives aspiring entrepreneurs stakes in up-and-coming businesses, while also allowing the startups to function in their early years without the creators of the startup having to worry about personal expenses like rent and electricity.
  6. Patent protection – Patent registration processes are usually expensive and cumbersome. This benefit of the Startup scheme tries to alleviate this issue by fast-tracking patent applications and offering rebates of 80% of the total value of the patent fee once the patent is filed. This makes the registration and protection of intellectual property easier. One of the major deterrents that stop people from building their own startup is the fear of patent infringement and having their intellectual property copied, which adversely affects their consumerbase. This benefit of the Startup scheme solves that problem as well, as the startups have a higher chance of being granted a patent quickly.
  7. Relaxed requirements for government contracts – One of the most profitable ventures for any company is being selected for a government contract. As a benefit of the Startup scheme, the standards to be met for being granted a government contract have been relaxed. The requirements of “requisite turnover” and “prior experience” are not applicable for startups, and this helps them compete against established producers for government contracts. This helps startups grow quickly and also benefits the government as a greater range of options is available to it.
  8. Research assistance – An important benefit of the Startup scheme is the establishment of research parks throughout the country. These parks will help students and startups conduct research regarding their projects and further develop them with state-of-the-art technology.
  9. Financial support – Perhaps the most important benefit of the Startup scheme is that it provides financial support to startups in their early stages. The Government has set up a corpus of Rs. 10,000 crores for four years through which it invests in various startups. Funds are provided to help these startups grow and prosper, and the Government is eventually paid back for this through economic growth and increased tax revenue through a larger economy.

How to register under the Startup India Scheme

Registration for the Startup India Scheme has been made quick and easy to incentivise registrations. First, go to the Shram Suvidha Portal. Register for an account there and click on the link that says “Is Any of Your Establishments a Startup?” This will lead to another page with detailed instructions on registering a startup for the benefit of the Startup scheme.

Conclusion

Startups are a very important part of the current Indian economic landscape. Innovations are coming from every sector, and the Startup India Scheme is an attempt to harness this wave of startups for mutual benefits. Startups that have completed their DPIIT registration and are within five years of their incorporation are eligible to avail the benefit of the Startup scheme. If you are an entrepreneur looking to actualise an innovative idea, there is no better time than right now to contribute to the economy through a startup.

If you are an entrepreneur looking to actualize an innovative idea, there is no better time than right now to contribute to the economy through a startup.

ezyLegal Editor

Written by

ezyLegal Editor

Get Expert Legal Advice For

Business Registration

Enter a valid phone number

Related Articles

View MoreView More

Hi there 👋!

How can I help you?

whatsapp