Start-up India is a flagship initiative of the Government of India. This program is a talk of town now a days and are being publicized by government as a great initiative. Here is nitty-gritty of this much awaited program.

  • Key Highlights:
  1. An entity fulfilling the conditions specified below, need to apply to Department of Industrial Policy and Promotion (DIPP) to be recognized as “start-up” entity and avail the benefits.
  2. It can be incorporated as a private limited company, registered partnership firm or a limited liability partnership.
  3. Above entity shall be considered as start-up upto 10 years from the date of its incorporation/ registration. 
  4. 100 % Income Tax Exemption on profits under Section 80-IAC of Income Tax Act for any 3 consecutive years out of 7 years beginning from the year in which such entity is incorporated.
  5. Tax Exemption on investments above fair market value received under Section 56(2)(viib) of Income Tax Act. (Popularly known as “Angle Tax Exemption”)
  6. For claiming benefit of Angel tax the Start-up is restricted from investing in any of the assets as specified below upto 7 years.
  7. An entity formed by splitting up or reconstruction of an existing business is not considered a “Start-up.”
  • What is a start-up entity? Not every new business is called a startup. Department of Industrial Policy & Promotions (DIPP) has defined that which entity can be termed as “startup entity” and can enjoy number of incentives and assistance, extended by the Government.

Start-up means an entity, incorporated or registered in India:

  As a private limited company or registered as a partnership firm or a limited liability partnership;
  Working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth
creation; and
  Which is not formed by splitting up or reconstruction of an existing business?  
An entity shall cease to be a Start-up: ♦ On completion of ten years from the date of incorporation /
registration for startup, or ♦ If its turnover for any previous year exceeds Rs. 100 crore

An entity fulfilling all the above conditions, need to apply to Department of Industrial Policy and promotion (DIPP) to be recognised as “start-up” entity and avail the benefits.

Now, here we have received the insights & whereabouts of Start Up India initiative from Government of India. We will talk about details of Angel Tax levied on Start Up India in next blog. Any comments or suggestions will be welcomed….Thank You for reading!!!

Note – Mr. Ashwin Jain, Author of this article is Income Tax Manager in ATMS & Co LLP, one of the biggest & most reputed Chartered Accountant firm In Mumbai.