All You Need to Know About the Startup India Yojana

The Indian Startup Ecosystem has had a phenomenal rise over the past few years, and it’s only just getting started. The central government recently approved the Startup India initiative which aims to promote startups in India and make it easier for them to get off the ground. This scheme, commonly referred to as Startup India Yojana, provides financial support, tax exemptions, and more to help entrepreneurs build innovative new businesses across the country.

What is Startup India

Launched by our Honourable Prime Minister Shri Narendra Modi, ‘Startup India’ is a mega initiative which provides support and impetus to budding entrepreneurs in setting up new ventures and nurture innovation. It aims at creating a startup culture in our country. In order to make best use of the fund, one must first understand how to apply for it. Here are some important points that will help you know about Startup India Scheme:

The government has set aside Rs 10,000 crore as an initial corpus to be invested into startups over a period of four years.

What’s in it for startups

The scheme introduces a liberalized regime for equity crowdfunding, allowing startups to raise funds from individuals, excluding public offers. It also extends relaxed reporting requirements in case of private placements or exemptions. It is hoped that with these relaxations, more companies would come forward and consider funding by way of private placement as an alternative source of financing, said Rajeev Kumar Gupta, joint secretary in charge of startup policy at DIPP. The government has set aside Rs 10,000 crore over three years under its Startup India initiative. This corpus will be used to provide incentives such as tax benefits and mentorship to early-stage ventures. In addition, it will also focus on areas such as intellectual property rights protection, access to credit for startups, technology development and so on.

Things you should know before taking advantage of the scheme

The government has set aside Rs. 10,000 crore over a period of 4 years for supporting startups and innovation in India. The biggest benefit will be an exemption from capital gains tax on investment made in unlisted companies that are less than 3 years old. Other benefits include tax deduction on interest payable on loans availed by startups, an optional migration to 100% flat rate income tax regime with no exemptions and deductions, liberal angel tax exemptions and a fast-track patent application process.

3 points to consider while filing your application

The grant for application for fund under startup India yojana is provided as a percent of registered capital in equity/liability (whichever is higher). As per Section 2(h) of Recognition u/s 3, read with sub-section(5) and Explanation 1 thereto, of Foreign Exchange Management Act 1999 , total investment under SEIS can be up to 15% of gross sales or an amount equivalent to 100% export turnover. The applicant company must be incorporated on or after April 01, 2016.