DPIIT Recognition to Startup Entity

DPIIT recognition for Startup in India

DPIIT (Department for Promotion of Industry and Internal Trade) recognition for a startup in India can be obtained by following the below steps:

Register your startup with the Ministry of Corporate Affairs (MCA): To be eligible for DPIIT recognition, your startup must be registered as a Private Limited Company, Limited Liability Partnership (LLP), or a Registered Partnership Firm.

• Apply for recognition on the DPIIT website: Once your startup is registered with the MCA, you can apply for DPIIT recognition through the Startup India portal (https://www.startupindia.gov.in/). You will need to provide details such as your company name, incorporation date, PAN card number, and other relevant information.
• Upload supporting documents: You will also need to upload supporting documents such as a Certificate of Incorporation, Memorandum of Association, Articles of Association, and other relevant documents.
• Wait for approval: After submitting your application, you will need to wait for DPIIT’s approval. It usually takes around 2-3 weeks to get a response.
• Receive recognition: Once your startup is recognized by DPIIT, you will receive a certificate of recognition along with other benefits such as tax exemptions, fast-track patent applications, and access to government schemes.

It’s important to note that DPIIT recognition is not mandatory for a startup in India, but it does provide several benefits and incentives that can help your business grow.

Procedure for Tax exemption under 80IAC

Section 80IAC of the Income Tax Act, 1961 provides tax exemptions to eligible startups in India. To avail the tax exemption under 80IAC, a startup must follow the below procedure:

• Register your startup: Your startup should be registered as a Private Limited Company, Limited Liability Partnership (LLP), or a Registered Partnership Firm.
• Obtain DPIIT recognition: Your startup should have obtained recognition from the Department for Promotion of Industry and Internal Trade (DPIIT). The procedure for obtaining DPIIT recognition is explained in the previous answer.
• Get a certificate from an Inter-Ministerial Board: Your startup should obtain a certificate from an Inter-Ministerial Board set up by the DPIIT. The Board will examine the eligibility of the startup for tax exemption under section 80IAC.
• File income tax return: Once you have obtained the certificate from the Inter-Ministerial Board, you can file your income tax return and claim tax exemption under section 80IAC. You should attach the certificate along with your income tax return as proof of eligibility for the exemption.
• Renew your certification: The Inter-Ministerial Board may require your startup to renew the certification every year to ensure that it continues to meet the eligibility criteria for tax exemption under 80IAC.

The tax exemption under section 80IAC is available for a period of 3 consecutive assessment years out of 10 years from the year in which the startup is incorporated. Therefore, it’s important to keep track of the eligibility period and renewal requirements to continue availing the tax exemption.

Certificate from an Inter-Ministerial Board

To get a certificate from an Inter-Ministerial Board for tax exemption under section 80IAC of the Income Tax Act, 1961, you need to follow the below procedure:

Prepare a detailed project report (DPR): The DPR should include the business plan, financial projections, and other relevant information about your startup.

• Submit the DPR to the DPIIT: You should submit the DPR to the DPIIT through the Startup India portal (https://www.startupindia.gov.in/). The DPIIT will review the DPR and may seek additional information if required. A detailed project report (DPR) is a comprehensive document that outlines the business plan and financial projections for a startup. The following information should be incorporated in a DPR to provide a clear understanding of the startup and its potential for success:
• Executive summary: A brief overview of the business plan, including the nature of the business, target customers, marketing strategy, and projected revenue and profits.
• Company profile: A detailed profile of the startup, including its legal structure, founders and management team, and any existing partnerships or collaborations.
• Product or service description: A detailed description of the product or service that the startup intends to offer, including its unique features and benefits to customers.
• Market analysis: A detailed analysis of the target market for the product or service, including customer demographics, competitors, and market trends.
• Marketing and sales strategy: A detailed plan for marketing and selling the product or service, including pricing strategy, distribution channels, and promotional activities.
• Operations and management: A detailed plan for the startup’s operations and management, including production processes, logistics, supply chain management, and staffing requirements.
• Financial projections: A detailed financial projection for the startup, including revenue and profit projections, cash flow analysis, and break-even analysis.
• Risks and challenges: A detailed analysis of the potential risks and challenges that the startup may face, including market competition, regulatory hurdles, and operational challenges.
• Social impact: A description of how the startup will contribute to the economic and social development of the country.

The above information will help the Inter-Ministerial Board assess the viability and potential of the startup and its eligibility for tax exemption under section 80IAC. It’s important for startups to provide accurate and detailed information in the DPR to increase their chances of obtaining the tax exemption.

Attend a presentation before the Inter-Ministerial Board: Once the DPIIT is satisfied with your DPR, they will invite you to make a presentation before the Inter-Ministerial Board. The Board comprises representatives from various government ministries and departments.

The Inter-Ministerial Board set up by the DPIIT may seek additional information from the startup during the certification process for tax exemption under section 80IAC. The type of information sought may vary depending on the specific case, but some of the common information requested may include:

• Details of the business plan and financial projections: The Board may seek detailed information on the startup’s business plan, including the nature of the business, target customers, marketing strategy, and projected revenue and profits.
• Employment generation: The Board may inquire about the number of people the startup plans to employ and the nature of the employment (e.g. permanent, contractual, etc.)
• Intellectual property: The Board may seek information on the startup’s intellectual property, such as patents, trademarks, and copyrights.
• Social impact: The Board may inquire about the startup’s social impact, such as how the business will contribute to the economic and social development of the country.
• Any other relevant information: The Board may seek any other relevant information that it deems necessary to determine the eligibility of the startup for tax exemption under section 80IAC.

It’s important for startups to be transparent and forthcoming in providing the requested information to the Inter-Ministerial Board, as this will help to expedite the certification process and increase the chances of obtaining the tax exemption.

• Receive the certificate: If the Inter-Ministerial Board is satisfied with your presentation and eligibility, they will issue a certificate confirming your eligibility for tax exemption under section 80IAC.

It’s important to note that the certification process may take several weeks or even months, depending on the workload of the DPIIT and the Inter-Ministerial Board. Therefore, it’s advisable to start the process well in advance to avoid any delays in availing the tax exemption. Additionally, the certificate from the Inter-Ministerial Board needs to be renewed every year to continue availing the tax exemption.