Startups recognized by DPIIT are eligible for a range of benefits through the Startup India Initiative:

1. Startups have the opportunity to undergo a streamlined online process for self-certifying compliance with six Labor Laws and three Environmental Laws

Six Labour Laws:

• The Building and Other Constructions Workers’ (Regulation of Employment & Conditions of Service) Act, 1996
• The Inter-State Migrant Workmen (Regulation of Employment & Conditions of Service) Act, 1979
• The Payment of Gratuity Act, 1972
• The Contract Labour (Regulation & Abolition) Act, 1970
• The Employees Provident Funds and Miscellaneous Provisions Act, 1952
• The Employees State Insurance Act, 1948

Three Environmental Laws:

• The Water (Prevention & Control of Pollution) Act, 1974
• The Water (Prevention & Control of Pollution) Cess (Amendment) Act, 2003
• The Air (Prevention & Control of Pollution) Act, 1981

1. For labour laws, startups will be exempt from routine inspections for a duration of 5 years. Inspections will only be initiated if there is a credible, written complaint of violation, duly approved by a superior officer one level higher than the inspecting officer
2. For environmental laws, startups categorised as ‘white category’ by the Central Pollution Control Board (CPCB) can self-verify compliance. Occasional random checks will be conducted for such startups

Tax Exemption under Section 80IAC

Post getting recognition a Startup may apply for Tax exemption under section 80 IAC of the Income Tax Act. Post getting clearance for Tax exemption, the Startup can avail tax holiday for 3 consecutive financial years out of its first ten years since incorporation.

Eligibility Criteria for applying to Income Tax exemption (80IAC):

• The entity should be a recognized Startup
• Only Private limited or a Limited Liability Partnership is eligible for Tax exemption under Section 80IAC
• The Startup should have been incorporated after 1st April, 2016

Exemption under Section 56(2)(VIIB) of Income Tax Act :

• Investments made by listed companies with a net worth exceeding INR 100 Crore or turnover surpassing INR 250 Crore into qualifying startups shall enjoy exemption under Section 56 (2) VIIB of the Income Tax Act
• Investments in qualifying startups by Accredited Investors, Non-Residents, Category I AIFs, and listed companies with a net worth exceeding 100 crores or turnover surpassing INR 250 Crore, will be eligible for exemption under Section 56(2)(VIIB) of the Income Tax Act
• The valuation of shares acquired by qualifying startups will be exempted up to a total cap of INR 25 Crore

Thus registering startups has a lot of benefits. However, it involves specific procedures and legal steps that are mandated by the Ministry of Corporate Affairs (MCA) and other relevant authorities. The process can be a bit bureaucratic. Dealing with government bureaucracy and the Registrar of Companies (RoC) can be challenging. India has a complex regulatory environment with multiple laws and regulations at the national, state, and local levels. Navigating through these regulations and ensuring compliance can be challenging, especially for first-time entrepreneurs. Lengthy and time consuming registration process, finding a desired and unique name, inconsistent interpretation of laws, overwhelming compliance and documentation requirements, Intellectual property challenges all these make new entrepreneurs’ tasks more complex. 

However, the advantages outrun the challenges. With numerous advantages and challenges relating to startup registration, is there a way out for new entrepreneurs? The answer is YES.  Consulting an expert like BCL India makes new entrepreneurs’ jobs easy. BCL India is well-versed with the regulatory landscape and can guide startups through the intricate procedures, ensuring compliance with laws and regulations.  We can also help startups evaluate and select the most suitable legal structure based on the nature of their business, risk tolerance, growth plans, and tax implications. We can expedite the registration process by preparing the necessary documents, ensuring accuracy and completeness, and submitting applications on behalf of the startup. We have extensive networks and connections within the industry. We  can connect startups with relevant professionals, potential investors, or other startups, facilitating growth opportunities and partnerships. We optimise the process, minimise errors, and expedite the registration, saving valuable time and resources for the startup. Above all, by leveraging our expertise, startups can navigate the complexities of the registration process with ease, ensuring compliance, efficiency, and a strong foundation for their business.

Engaging with BCL India who have experience in the startup ecosystem and knowledge of the Startup India program can significantly streamline your registration process, enhance compliance, and maximise the benefits that startups can derive from this initiative. It’s important to select a consultant who understands the specific needs and goals of the startup and can provide tailored guidance accordingly.