Startup Benefits In India

Startup Benefits In India

Entrepreneurs create startups to bring innovation to a product or service area. Because startups are fresh to the market, they are exposed to fierce competition and frequently fail before establishing a scalable business. To succeed in the marketplace, such businesses must be safeguarded and encouraged. Their intellectual properties and abilities will be cultivated through various incentives, including an appropriate habitat and financial resources. A startup recognized by the Ministry of Commerce's Department of Promotion for Industry and Internal Trade (DPIIT) is eligible for various privileges.

Startup India is a government-led project.

Prime Minister Narendra Modi announced his Startup benefits in India program on January 16, 2016. The government's main project is to strengthen the ecosystem, boost long-term economic growth, and create jobs. Its goal is to make India a country where people create jobs rather than look for them. The following are some of the advantages of joining the Initiatives:

  • Compliance based on self-certification; 3-year tax exemption.
  • Easy company formation; patent application and IPR protection for startups; simplified public procurement regulations.
  • The SIDBI fund of funds is a collection of monies that have been pooled together.

Ayurvedic Biology Program, Venture Capital Assistance, Technology Development Program and the program for the Promotion of Innovation, Rural Industries, and Entrepreneurship by their respective ministries are some of the other benefits of the initiative by government schemes. Startup benefits in India are also in charge of organizing numerous programs and providing startups with tools and resources.

The DPIIT had also determined which businesses are suitable to be classified as startups to benefit from schemes like the " Make in India " initiative. For an entity to be classified as a startup benefit in India, it must meet the following criteria:

  • The date of incorporation or registration has not yet been finished for ten years.
  • A private limited company, a partnership firm, or a limited liability partnership (LLP) must be the legal entity.
  • For any of the financial years, the entity's turnover must not exceed one hundred crore rupees.
  • The entity should strive to improve its business through innovation, development, or improvement, with a strong potential for creating jobs and wealth.


The government has set up various loans and funds specifically for the benefit of startups. Startups in need of funding can take advantage of these benefits. The options listed below are particularly beneficial to startups.

  • Funds for Startups (FFS)

The government has established a Funding Facility for Startups (FFS) at the Small Industries Development Bank of India (SIDBI), with a corpus of Rs 10,000 crore that would be spent only on startup operational parameters. Alternative Investment Funds (AIFs) that are SEBI-registered have given their approval. Startups who want to borrow money from FFS must put up at least twice as much money as they borrow.

  • CGTMSE loans

The Ministry of Micro, Small, and Medium Enterprises introduced the Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE) scheme (MSME). This scheme offers loans of up to one crore rupees with no collateral or security. The government is establishing a Credit Guarantee Fund for startups under the CGTMSE, with an annual budget of Rs. 500 lakh for four years to give credit guarantee cover to banks and lending institutions, as granting loans to startups is considered risky.

  • MUDRA Bank

The Micro Units Development and Refinance Agency Bank (MUDRA) is a government-owned financial organization that focuses on providing low-interest loans to non-corporate, non-farm small, and micro-businesses. Various Commercial Banks, RRBs, Small Finance Banks, MFIs, and NBFCs then issue loans to MSMEs through these institutions. Only new and small firms with a minimum of 18 employees are eligible to apply. There are three types of loans available:

  • Loans of up to Rs.50,000 are available through Shishu.
  • Loans up to Rs.5 lakh are available through Kishore.
  • Loans up to Rs.10 lakh are available from Tarun.

Exemptions from taxation under the Income Tax Act of 1961

Under the Launch India scheme, startups are excluded from taxpayers for the first three years after formation. In addition to the exemption, the Income Tax Act of 1961 contains a number of other rules aimed at assisting startups in their growth. The government grants the following exemptions:

Benefits available under the Companies Act

Startups are "to be companies" that require government support in order to thrive. The Companies Act of 2013 is ready to address these needs and offers the following advantages:

  • Suppose a startup gets an excess of Rs.25 lakh or more in a single tranche from a person in the form of a convertible instrument that is convertible into preferred stock or due and payable within just a period of not more than 30 days from the date of release. In that case, it is not considered a deposit.
  • For the first five years after incorporation, a startup does not have to comply with the conditions for accepting deposits set forth in subdivisions a to I of section 2 ( d of the Companies Ordinance.
  • A startup may hold at least one board of directors meeting in each half of the year, with a break of not under 90 days between the two meetings.
  • Employee Stock Options may be granted to a promoter, director, or another member of the group who owns well over ten percent of the company's outstanding equity shares within 10 years of its incorporation or registration.

The Indian government is always attempting to encourage young brains to conceive and expand their knowledge by providing numerous incentives to achieve this goal. Various tax exemptions, exclusion from time-consuming compliances, and finance are only a few of the recent beneficial measures taken in this direction. India has one of the highest populations of internet and app users globally. Because of the process's simplicity, it was critical to digitalize it. These startups are regarded as successful when they expand to the point where they can launch their own IPO. Simplification, facilitation, and simplicity of doing business, according to Tourism and Industries Minister Piyush Goyal, have helped India establish more businesses.

Contact Us for Startup Fund raising services, startups valuation in Delhi, Noida, Gurgaon, and all across India: write to us at Or Call On :(+91)-9711021268 +91-9310165114

- Share this post on -