Startup

The Startup India Scheme

Soumya Shekhar
Soumya Shekhar 02 min read 1427 Views
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What is the Start-up India Scheme?

The start-up culture in India is booming. The recent news of Cred and Meesho becoming unicorns has spread a sense of positivity among the early-stage founders. The government of India, too, wants to capitalize on this high sentiment. To boost the further growth of start-ups, India's government started the Startup India Initiative on January 16, 2016. The start-up India initiative has three objectives: 

  • Create a uniform stage for the entire start-up ecosystem to come together. 

  • Facilitate and encourage entrepreneurship

  • Promoting entrepreneurship not only in metro cities but also in smaller regions of the country. 

Through this article, we shall explore the various aspects of the Start-up India scheme.

 

Who can Register in Start-Up India?

Eligibility for registering under the Start-up India Scheme depends upon the nature of the entity.  A Private Limited Company (Pvt. Ltd. Co.), a Partnership Firm under Section 59 of the Partnership Act, 1932, or a Limited Liability Partnership (LLPs) under the Limited Liability Partnership Act, 2008 can register under the Start-Up India scheme if they fulfill the below listed criteria:-

  • Not more than ten years should have passed since the date of business registration.

  • The entity's annual turnover for any financial year since its registration should not be more than INR 100 crores. 

  • The ais and objectives of the entity should be innovation and development. It should promote employment generation and wealth creation. 

  • Enterprise is not formed by splitting up or reconstructing an already existing business. 

  • Start-ups devising innovative solutions in sectors such as social impact, waste management, water management, etc. 

 

What is Startup India Registration?

Start-up India Registration Scheme is a flagship initiative of the Indian government to build a robust ecosystem for nurturing innovation and Start-ups in the country. The start-up registration process on the Start-up India platform involves a simple registration. Registering a profile on the start-up India hub is a relatively simple process. We can start by clicking on the "Register" tab on the top right-hand corner on the home page of the start-up India scheme, which will be directed to the "mygov" platform for authentication where the user will be asked to fill in details such as the name, email address, etc. This will give the user an OTP or a one-time password for verification and a link to set a new password. The user can then sign in using the login credentials he just created. This will direct him to the Hub to select and create the profile of a stakeholder that best defines his role.

You will need the following documents to register on the Start-up India hub: 

  • Certificate of incorporation/registration. 

  • PAN

  • Company details

  • Details of directors/partners

  • Pitch deck

  • Revenue model

Which Registration is Best for a Start-Up?

The most favored business structures for a start-up are Private Limited organizations and Limited Liability Partnerships ( LLPs ). A Private Limited organization has more credibility. Investors prefer putting their money in private companies, and the government too favours the setting up of such corporate structures. Limited Liability Partnerships are the next most-favoured structure chosen by the start-up founders. An LLP is a distinct entity, and the partners' liability is limited. It has lesser compliances than a private company, and hence, those founders who do not want to burden themselves with legalities opt for an LLP structure.

What are the benefits of the Start-Up India Scheme?

The Startup India Scheme provides various advantages to the start-ups registered under it. In any case, to avail these advantages, a firm should be set up by the Department for Industrial Policy and Promotion ( DPIIT ) as a start-up. 

Start-ups are permitted to self-declare their compliance with specific labour laws and environmental laws. This benefit of self-declaration is available for five years since the date of inclusion on the scheme. Start-ups are permitted three-year tax exclusion, as well as the best-licensed innovation administrations and assets exclusively working to assist start-ups so that it protects their intellectual property.

 

Can a Foreign Company Register Under the Startup India Hub?

Any entity that has its office registered in India can enlist itself on the Startup Scheme.  However, the scheme does not facilitate the registration of foreign-incorporated companies. If a foreign company has a subsidiary in India, such a subsidiary can register under the Startup Scheme, given it fulfills all the relevant criteria. 

For how long is a company recognized as a start-up?

Any business entity that has completed ten years from the date of its registration and has exceeded the previous years' turnover of 100 crores shall stop being recognized as a start-up under the Startup India Scheme on completion of 10 years from the date of its registration.

How do I know my registration is complete?

Once the application is complete and the start-up gets recognized, the applicant will receive a system-generated certificate of recognition. The applicants will also be able to download this certificate from the Startup India portal

People Also Consulted a Lawyer about Startup India Scheme. 

 

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MSME Registration in India
Startup

MSME Registration in India

What is MSME Registration?

The Micro, Small and Medium-sized Enterprises Development Act allows MSMEs in the manufacturing and service sectors to register as MSMEs or SSIs. It is not compulsory to register as an MSME. But, you should still register as it provides several projects benefits such as tax benefits and protection against non-payment. 

 

Who is eligible for MSME Registration? 

Only manufacturers, producers, and service providers must use the MSME tag and register under it. Any manufacturer or service provider who meets the eligibility requirements may use the MSMEs single window registration system to register. The revised eligibility requirements effective from July 1, 2020, are applicable for the three types of Enterprises. This includes Micro Enterprises with Investment up to Rs 1 crore and turnover up to Rs 5 crore, for Small Enterprises with Investment up to Rs 10 crore and turnover up to Rs 50 crore, for Medium Enterprises with investment up to Rs 50 crore and turnover up to Rs 250 crore. Any form of business entity may obtain Micro, Small & Medium Enterprises (MSME) registration or Udyog Aadhaar registration. This includes Partnership Firms, Private Limited Companies, Public Limited Companies, Limited Liability Partnerships, Hindu Undivided Families, Self-Help Groups Societies, Co-operative Societies, Trust Others. 

 

Is Registration Compulsory for MSMEs? 

Registration under the MSMED Act is not compulsory for MSMEs and Small Scale Industries (SSIs). But, it is always better to register, because a registered SSI or MSME gets a lot of benefits. The procedure for registering is completely online and is very simple. You require your entity’s name, Aadhaar number, bank account and PAN details. After you fill in your details, a reference number gets generated and you receive your certificate after verification of details. 

 

MSME Registration Certificate

Once you are registered and the process of verification is complete, you will obtain an MSME registration certificate. This certificate is proof that your entity or company is now registered as an MSME. This MSME/SSI registration certificate is valid for your entire lifetime. If you want to get your registration cancelled, you would need to write an application to the nearest Udyog Aadhaar Registration Centre and specify the business and the reasons behind cancelling the registration. 

 

Can an Individual Register for an MSME Registration? 

Anyone who wants to start a micro, small, or medium business may use the Udyam Registration portal to fill out a self-declaration form with no need to upload any records, papers, certificates, or evidence. During MSME registration, business owners must provide correct personal information such as name, Aadhar, industry name, PAN, mobile number, and bank account details. Furthermore, for MSME registration, business owners are not expected to pay any fees. A permanent identification number, known as the Udyam Registration Number, will be given to the entity when it registers. On completion of the registration process, an e-certificate, also known as the Udhyam Registration certificate, will be issued. 

Udyog Aadhaar Memorandum - Online Verification process helps individuals figure whether the MSME’s are registered. With the help of the 12-digit UAM number, verification is possible through the https://udyamregistration.gov.in/UA/UA_VerifyUAM.aspx link.

 

How do I check if a Company is MSME Registered? 

MSME database is available on the website of Udyam registration. You can search if an entity is MSME registered or not by typing the name and product/activity of the MSME. The search yields result by activity/products manufactured. You can then further filter the search to find out of a specific company is MSME registered or not. 

 

Difference between Udyog and MSME registration

Udyog Aadhar is a government registration mechanism that provides the company with a registration certificate and a unique number known as Udyog Aadhar number. This programme is aimed specifically at small and medium-sized businesses. Udyog Aadhar aims to provide companies with the most access to government programs possible. However, on the other hand, The MSMED Act promotes a variety of schemes, subsidies, and benefits to support MSMEs, which are the backbone of the Indian economy. The MSME registration process is required to reap the benefit from governmental schemes, state schemes, and public services, although it is not obligatory. Further, The Udyog Aadhaar Memorandum Scheme, which the central government introduced, allows entities with an Aadhaar number, which is mandatory for MSMEs, to take advantage of easily accessible loans, credit, and government subsidies.

87% People found  Consultation with Lawyer very useful and quick about MSME Registration. 

 

Why is MSME Registration Important? 

MSME Registration is important because: 

  • It identifies medium and small-scale industries and provides them with the assistance which they require to grow and develop. 

  • It provides tax benefits to MSMEs and SSI. 

  • It provides protection against non-payment of dues. 

  • Even individuals and sole proprietorships can obtain an MSME/SSI Registration and hence, it formalizes the business activities being carried at micro, medium and small scale. 

The inception of this sector distinguishes medium enterprises and attempts to combine the three levels of these businesses, namely micro, small, and medium. This structure establishes a legislative consultative process at the national level, with a balanced representation of all stakeholders, especially the three types of businesses, and a broad range of advisory functions. Also, With the help of a policy structure and efficient steps taken by the government, the development of MSMEs in the Indian economy has seen tremendous growth and will continue to flourish at this rate of progress.

The Startup India Scheme
Startup

The Startup India Scheme

What is the Start-up India Scheme?

The start-up culture in India is booming. The recent news of Cred and Meesho becoming unicorns has spread a sense of positivity among the early-stage founders. The government of India, too, wants to capitalize on this high sentiment. To boost the further growth of start-ups, India's government started the Startup India Initiative on January 16, 2016. The start-up India initiative has three objectives: 

  • Create a uniform stage for the entire start-up ecosystem to come together. 

  • Facilitate and encourage entrepreneurship

  • Promoting entrepreneurship not only in metro cities but also in smaller regions of the country. 

Through this article, we shall explore the various aspects of the Start-up India scheme.

 

Who can Register in Start-Up India?

Eligibility for registering under the Start-up India Scheme depends upon the nature of the entity.  A Private Limited Company (Pvt. Ltd. Co.), a Partnership Firm under Section 59 of the Partnership Act, 1932, or a Limited Liability Partnership (LLPs) under the Limited Liability Partnership Act, 2008 can register under the Start-Up India scheme if they fulfill the below listed criteria:-

  • Not more than ten years should have passed since the date of business registration.

  • The entity's annual turnover for any financial year since its registration should not be more than INR 100 crores. 

  • The ais and objectives of the entity should be innovation and development. It should promote employment generation and wealth creation. 

  • Enterprise is not formed by splitting up or reconstructing an already existing business. 

  • Start-ups devising innovative solutions in sectors such as social impact, waste management, water management, etc. 

 

What is Startup India Registration?

Start-up India Registration Scheme is a flagship initiative of the Indian government to build a robust ecosystem for nurturing innovation and Start-ups in the country. The start-up registration process on the Start-up India platform involves a simple registration. Registering a profile on the start-up India hub is a relatively simple process. We can start by clicking on the "Register" tab on the top right-hand corner on the home page of the start-up India scheme, which will be directed to the "mygov" platform for authentication where the user will be asked to fill in details such as the name, email address, etc. This will give the user an OTP or a one-time password for verification and a link to set a new password. The user can then sign in using the login credentials he just created. This will direct him to the Hub to select and create the profile of a stakeholder that best defines his role.

You will need the following documents to register on the Start-up India hub: 

  • Certificate of incorporation/registration. 

  • PAN

  • Company details

  • Details of directors/partners

  • Pitch deck

  • Revenue model

Which Registration is Best for a Start-Up?

The most favored business structures for a start-up are Private Limited organizations and Limited Liability Partnerships ( LLPs ). A Private Limited organization has more credibility. Investors prefer putting their money in private companies, and the government too favours the setting up of such corporate structures. Limited Liability Partnerships are the next most-favoured structure chosen by the start-up founders. An LLP is a distinct entity, and the partners' liability is limited. It has lesser compliances than a private company, and hence, those founders who do not want to burden themselves with legalities opt for an LLP structure.

What are the benefits of the Start-Up India Scheme?

The Startup India Scheme provides various advantages to the start-ups registered under it. In any case, to avail these advantages, a firm should be set up by the Department for Industrial Policy and Promotion ( DPIIT ) as a start-up. 

Start-ups are permitted to self-declare their compliance with specific labour laws and environmental laws. This benefit of self-declaration is available for five years since the date of inclusion on the scheme. Start-ups are permitted three-year tax exclusion, as well as the best-licensed innovation administrations and assets exclusively working to assist start-ups so that it protects their intellectual property.

 

Can a Foreign Company Register Under the Startup India Hub?

Any entity that has its office registered in India can enlist itself on the Startup Scheme.  However, the scheme does not facilitate the registration of foreign-incorporated companies. If a foreign company has a subsidiary in India, such a subsidiary can register under the Startup Scheme, given it fulfills all the relevant criteria. 

For how long is a company recognized as a start-up?

Any business entity that has completed ten years from the date of its registration and has exceeded the previous years' turnover of 100 crores shall stop being recognized as a start-up under the Startup India Scheme on completion of 10 years from the date of its registration.

How do I know my registration is complete?

Once the application is complete and the start-up gets recognized, the applicant will receive a system-generated certificate of recognition. The applicants will also be able to download this certificate from the Startup India portal

People Also Consulted a Lawyer about Startup India Scheme. 

 

Knowing ESOPs and how it can help in retaining talent
Startup

Knowing ESOPs and how it can help in retaining talent

ESOP stands for Employee Stock Ownership Plan. An employee stock ownership plan gives workers ownership interest in the company. Employee Stock Ownership Plan is a benefit scheme for the employees. The company or organization gives the benefit to the employees of buying the shares after a certain period of time. An employee must provide service or work for a definite period of time before receiving the benefit of Employee Stock Ownership Plan. 

 

 

There are two types of Employee Stock Ownership Plan-:

 

Selective Plans 

The facility of owning some shares of the company is made available only to the senior executives. 

 

All Employee Plans

The facility of owning some shares of the company is made available to all the employees of the company 

 

 


Why do the Companies offer Employee Stock Ownership Plan? 

 

The companies offer stocks to the employees in order to attract and retain skilled and experienced talent. They offer stocks to the employees in a phased manner, which is a form of an incentive for the employees to work with the company for a longer duration. Many a times start-up companies or companies which cannot provide high salaries provide Stock Options to their employees. 

 

 

Tax Implications

 

The Employee Stock Ownership Plan has tax implications. It is very important to understand this before exercising the option. ESOPs are taxed at two different stages-:

 

While exercising – in the form of a perquisite

In this option the difference between the Fair Market Value and exercise price is taxed 

 

While selling – in the form of capital gain.  

The employee can sell the shares received however there is a certain amount of time period after which the employee can buy and then sell the shares. At the time of selling if the employee gets money higher than that of Fair Market Value then he will be liable to pay the Capital Gains Tax. The amount of Capital Gains Tax is determined on the period of holding, i.e. from the date of exercise to the date of sale. 

 

 

Benefits of Employee Stock Ownership Plan to the Employers

 

When the employees are rewarded with stocks, they would by default give in their 100 percent of hard work and efforts as they themselves will also benefit when the prices of their company’s shares soar up. Rewarding the hard work and dedication of the employee’s work is necessary, by giving them stock would also remove the necessity of providing cash incentives to the employees at the same time giving them incentives. 

 

 

Challenges of having an Employee Stock Ownership Plan for the Employers

 

Employee Stock Ownership Plan has complex rules and regulations. Companies which provide Stock Ownership benefit to the employees must have a proper administration system which works towards providing of Stock ownership to the employees. If a company does not have proper staff to look into the administration of Employee Stock Ownership Plan then it could invite certain risk issues. Upon establishing Employee Stock Ownership Plan the company must have proper administration, staff, including third party administration, legal costs, trustees. It must be aware of the costs that will include while providing this facility. 

 

 

Disadvantages of Employee Stock Ownership Plan for the Employees 

 

Many times under this scheme the employees invest a large part of their savings in one investment scheme, which is not advisable. Any person saving more than 10 percent of his/her salary is warned by the investors. Ideally, it is not logical to save a large amount of savings in the company’s stocks, as if at any point the company fairs poorly or runs into losses then a huge amount of savings of an employee will be lost. 

 

 

An ESOP plan is one of the best ways for a startup to attract and retain talent. In order for the company to grant ESOPs to its employees, it needs to be registered as a Private Limited Company.
 

Assignment of Trademarks
Trademark & Copyright

Assignment of Trademarks

Trademark is a form of Intellectual Property. It essentially refers to the brand name that allows for differentiation between similar goods. Trademarks can be in the form of numerals, a combination of colours, signature, name, or device. Companies spend a huge amount of money through advertising and product design to establish their brand value. The same is treated as an asset that can be transferred like any other type of property, in accordance with the Trade Marks Act, 1999 and accompanying Rules of 2017.

 

 

Assignment v/s Licensing

 

The assignment of Trademarks refers to the transfer of ownership of the Trademark to the buyer. The transfer can be with or without goodwill.

Licensing refers to a limited transfer i.e.; the transferee is allowed to use the Trademark (within the limits of the agreement entered upon) without having the ownership transferred to him. The Licensor(owner of the Trademark) usually generates loyalties while the Licensee gets the ability to expand his business using the appeal of the Trademark.

 

 

Types of Assignment

 

The following are the different types of Assignments allowed under the Act:

I. Complete Assignment: 

As the name entails, a complete transfer of all the rights pertaining to the Trademark is transferred to the buyer. The buyer would be empowered to sell it later on if he so chooses to.

II. Partial Assignment: 

Herein only restricted ownership pertaining to specific products or services is transferred to the buyer.

III. Assignment with Goodwill:

Goodwill is a term that is easy to describe but hard to define. It refers to the intangible value of (in this case) a Trademark. In this type of assignment, the owner transfers the rights and values related to the product or service.

IV. Assignment without Goodwill:

Trademark Ownership excluding Goodwill stands transferred. The buyer cannot use the Trademark for the same product or service as used by the owner. That is, the buyer shall be allowed to use the purchased Trademark for products other than those already being produced by the original owner, as the goodwill relating to that product is not transferred.

 

There exist certain restrictions on the assignment of registered Trademark so as to prevent creating confusion in the mind of the public or users.

  1. The restriction is placed on the assignment of a trademark that results in the creation of exclusive rights in more than persons that may lead to the production of the same goods/services or the same description or associated with each other.
  2. The restriction is placed on the assignment that results in the Trademark being used in different parts of the country by different people simultaneously.

 

 

Assignment Deed

 

While drafting an assignment deed, it is necessary to include the following:

  1. The name of the owner which needs to match the records present with the Registry if the Trademark is registered.
  2. Specificities like the territorial extent of the Trademark should be explicitly mentioned in order to prevent any ambiguity
  3. It is absolutely necessary to clearly mention whether the transfer of goodwill is taking place or not.
  4. The date of the assignment should be specified.

 

 

Process with the Registry

 

It is important to record the change in ownership with the Trademark Registry. According to Rule 75 of Trademarks Rules, 2017, Form TM-P should be filed with the Registry intimidating the changes to the ownership of Trademark. A flat fee is applicable - Rs.9,000 for E-Filing, and Rs.10,000 for Physical Filing. This has made the process of assignment streamlined and simpler.

 

 

Conclusion

 

Trademarks are valuable assets. They are a measure of a company's popularity and reputation in the market. Therefore, entities rather than investing a lot of time, effort, and money into creating a brand of their own sometimes prefer to buy it. It is advantageous for the buyer as through minimal effort; a customer base is handed over. Assignment deeds should be made with proper care otherwise, they might become a reason for litigation.

Everything You Need To Know About GST
Tax

Everything You Need To Know About GST

Goods and services often include costs at every step of production. Earlier, these were added at every step of the production stage and taxed simultaneously. However, in order to simplify the system of multiple taxation and complications of filing several indirect taxes, the Government of India on July 1, 2017, introduced the Goods and Services Tax (GST). This is a cumulative tax on the costs of production. It is a single tax, which is typically levied on the seller and ultimately transferred to the government.  

 

 

Need for GST

 

The Indirect Tax regime in existence prior to the introduction of GST was inefficient and opaque. Disproportionate taxation was present. States had their own taxation requirements. Problems were made worse by the presence of cascading taxes. Taxes were collected at every stage, inevitably making the commodity’s price higher. The tax burden was pushed on to the final consumer. 

 

It became common to practise to evade taxes. Sales used to take place without an invoice, creating the problem of tax evasion. Value Added Tax (VAT) was brought in to tackle this problem but it had flaws of its own which prevented it from completely achieving its objective. 

 

The complex taxation structure was a problem for many foreign companies. Many companies sought to produce their own spare parts as to preclude the probable taxes that could become payable. Essentially the prior model was very restrictive for effective growth of trade it created more problems than it solved.

 

 

Working of GST

 

With the advent of GST all the various state and central taxes were replaced. A uniform tax rate was introduced across the Union of India 

 

As per this new regime, the Centre now collects the Central GST (CGST) and the States levies State GST (SGST) on the supply of goods within the state. The Integrated GST (IGST) is levied on interstate supply of goods and services within the state, though collected by the Centre this is distributed equally amongst the Centre and State. These taxes are levied according to the tax slab heads under which a good or a service falls. The same is decided by the GST Council.

 

The GST council is headed by Union Finance Minister acting as the Chairperson. Union Minster of State of Finance is a member from the Centre.  The states can nominate any Minster of their government as members to this council, it usually happens to be the Minster in charge of Finance.

 

This body takes all the key decisions with regards to amendments and changes in GST. Their constitutionally mandated role is to recommend to the Union and the States on various issues surrounding the GST like slab rates and goods falling within the same. 

 

 

Benefits gained from GST

 

GST created a uniform taxation system, removing the indirect tax barriers put in place effectively dealing with the problem of the multiple taxes present in states. The destination-based taxation model envisioned under GST helped in dealing with the challenge of cascading taxes. This led to lowering of the end costs and consequent reduction in the tax burden.   


The uniform and streamlined tax model is beneficial to the businesses as well. Less complexity surrounding investment decision making and other financial processes. Companies are now more willing to outsource the production of commodities/services enabling the creation of MSMEs generating further employment. 


One of the best aspects of this particular Tax model is reliance on Digital services. Compliances are filed digitally now and the details are available to a host of investigative agencies thereby reducing the prevalence of tax evasion. And more compliance results in more financial resources available at the disposal of the State, allowing it to carry out its functions efficiently.

 

 

Criticisms of GST

 

The well-intentioned reform is not without faults. Constant amount of changes that have been bought about since the rollout of GST have made compliance difficult. Many small businesses are not in a position to afford accountants to do such compliances, as they work in a very ad hoc manner. Even the big businesses are affected by the regular changes proposed. If compliance is the aim, then the entire procedure needs to be simplified otherwise the objective would never stand realised.

 

 

Conclusion

 

GST is the most massive change brought about in the Indian Tax system since Independence. The system is not without flaws, but they do not outweigh the positive aspects of the Act. In the long run this would indeed be successful in achieving its objectives.
 

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