List of Benefits to Start-ups by the Indian Government

It's challenging to start a new business and keep it afloat. Most start-ups fail in their early years due to poor planning, lack of funds, and government regulations that restrict their ability to function freely. To solve these issues, the Indian government has made it easier for companies to comply with numerous regulations. It has also provided tax breaks and introduced a variety of funding options. Continue reading to the end of the article to learn more about government support for start-ups.
 

Top 9 Benefits for Start-ups in India

 

1. Simple Registration Process

   To create more opportunities for start-ups in India, the government has shifted the entire registration process online through websites and mobile-based applications. With only a few clicks, people can now fill out the application form, upload their documents, and can pay the required registration fees. Apart from that, the government has eased the prerequisites for labour and environmental regulations. You can now self-certify three environmental and nine labour law compliances.
    

2. Patent protection

   Registering for a patent or trademark is a cumbersome process. But, under the Start-up India scheme, the registration process has been made simpler. Moreover, many steps were taken to protect intellectual property. One of them is a fast-track assessment of the patent application.
    
   In addition to the above, being a start-up, you are also eligible to get an 80% rebate on the patent fee.
    

3. Tax benefits

   The government has started offering various Start-up India tax benefits to promote the start-up ecosystem. These include:
    

   • Section 54EE:

     If your start-up firm made a long-term capital gain and put it in the government's special funds within six months of the profit, you qualify for tax exemption on the same. This benefit is applicable for three years.
      

   • Section 56:

     If your start-up gets recognition from the Department for Promotion of Industry and Internal Trade (DPIIT) and your firm's aggregate paid-up share premium and share capital is less than Rs 25 crores, you are eligible for angel tax exemption.
      

   • Section 56(2)(viib):

     If your start-up is recognised by DPIIT and you receive any consideration for the issuance of shares that exceeds its fair market value, that sum is tax-free. However, you must file a declaration with DPIIT in Form 2 for this.
      

   • Section 79:

     You can carry forward your losses as a start-up founder if you have at least 51% of the shareholding or are the company's sole shareholder.
      

   • Section 80 IAC:

     If your business was established on or after April 1, 2016, you are eligible for a tax holiday for three consecutive years out of the first seven years from inception.  
      

Also Read: Take Advantage of Lesser Known Income Tax Deductions
 

4. Setting Up of R&D Facilities

   Under the Start-up India scheme benefits, the government has already set up seven research parks. The parks mostly house prestigious educational institutions such as IITs. The main objective of these research and development facilities is to help start-ups launch more innovative products and services into the market.
    

5. Easy Access to Funds

   Traditional financial institutions are wary about lending to new businesses. The reason is that these businesses are still in their infancy and face several financial risks. To address this issue, the government has launched many business loan schemes, including:
    

   • Funds for Start-ups (FFS):

     The government has maintained a reserve of Rs 10,000 crores with the Small Industries Development Bank of India (SIDBI). FFS is approved by SEBI registered Alternative Investment Funds (AIFs). If you are a start-up and want to apply for FFS, it is obligatory for you to invest a minimum of twice the amount borrowed.
      

   • Mudra Loans:

     Mudra loans are low-interest loans accessible to micro and small businesses and start-ups. It allows you to borrow money up to Rs 10 lakhs. The age requirement for this loan is 18 years old.
      

   • CGTMSE loans:

     The Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE) loan is the flagship scheme of the Ministry of Micro, Small and Medium Enterprises (MSME). It offers an unsecured loan of up to Rs 1 crore.
      

Also Read: Funding Options for Small Businesses and Start Ups
 

6. Networking Options

   If you don't have a strong market connection, succeeding in a newly established business is challenging. Networking opens up a slew of new possibilities. And, to assist you, the government hosts at least two fests each year. The fests are held on a national and international scale. It allows you to build connections with potential investors and budding entrepreneurs.
    

7. Tender Benefits 

   Government projects are tough to get by, especially for new businesses. Such projects necessitate prior experience, and you will have to compete with a slew of other applicants for one. But under the Start-up India scheme, you receive incentives to acquire government tenders. 
    

8. Incubator Set-up

   The incubator helps your new business with legal compliance, administrative support, and training. It can also help you find office space and raise financing from venture capitalists or angel investors. They offer these services in exchange for a 2-10% equity stake in your company.
    
   Under the Niti Aayog's Atal Innovation Mission, the government has established Atal Incubation Centres (AIC) to promote a start-up ecosystem.
    

9. Easy Entry and Exit Options

   As already discussed, the streamlined registration process has made it easier for new businesses to enter the market. But if being a start-up, you need to wind up your firm for any reason; you can do so with ease. The non-stringent compliance process allows you to close your business within 90 days of submitting a formal closure application.
    

Also Read: Financial Tips To Set Up A New Business
 

To Conclude: 

In the last few years, the country has experienced massive developments in terms of start-ups. India is one of the largest internet users in the world. Considering this, the government has digitalized the bulk of processes, including registration and exit, compliance, and more, based on this information. Tax advantages and credit programmes offered by the government, as well as low-interest business loans, help start-up enterprises better manage their finances. So, if you're a startup, all you have to do is stick to the appropriate approach and make use of the benefits outlined above to secure your success.