How to register a startup in India: A step-by-step guide

Apr 05, 2024

In the very short term, India has seen a huge surge in the number of registered startups.


Even though there are many unregistered businesses, registering your startup is a must to raise funding for your business and enjoy other legal liberties. Also, banks don’t support or provide loans to startups that aren’t incorporated. 


The optimistic news is India is on the cusp of becoming a startup pro country and opening doors to many by making the startup India registration process smoother.


It’s no longer a time-consuming and document-heavy task.


If you are one of the aspiring entrepreneurs who are looking for information on how to register a startup in India, this guide will certainly help you. 

What are the Startup eligibility criteria for any business?


In order to proceed with the startup India registration process, your small business should meet certain requirements and eligibility criteria. 


Basically, a startup is a small company run by a few people and solves issues that are already present in current systems.


Under the Companies Act 2016, these small companies are eligible to register themselves as startups, if they meet the following criteria and enjoy tax benefits, relaxed compliance, and many other benefits.



• If you have already registered, your company shouldn’t be older than 10 years from the date of registration.


• The annual revenue shouldn’t cross Rs. 100 crores or more in any of the 10 years of its existence where it’s eligible to be called a startup. 


• Your business shouldn’t be a part of an already existing entity or split from an existing organization.


• Your company’s vision should be focused on the development or improvement of an existing product/service and have a scalable business model that can generate revenue as well as promote job opportunities.


• Should have registered as a private company limited, partnership, or limited liability partnership structure.


• Your company should have obtained funding from an investment team (Angel investing, incubation programs, or equity funds) and must have obtained a recommendation letter from them.


• You should have obtained approval from the DIPP commission (Department of Industrial Policy and Promotion).



Upon meeting the above requirements, your company is entitled to call itself a startup and gain DPIIT recognition.


This section will answer your question about how to register a startup in India and explain the steps you need to follow to fulfill the startup registration in India.

1. Incorporate your company


The startup India registration process includes the following steps.

Name registration


Your business should have a name first and reserve it before anyone else chooses it. A name is important for creating your brand and registering your company legally.


To find if a selected name is available and reserve it for you, you can use the RUN (Reserve Unique Name) platform managed by MCA. Your name should follow the naming convention set by them.


Once reserved, they store it for 20 days before which you will have to finish other registration formalities. 


Here is how your company name gets approved and becomes eligible for startup registration in India.


• Your selected name should be unique and no other registered govt or private company should have kept it already.


• It shouldn’t sound offensive or look like it’s related to the government.


• You should have entered at least two of your company directors' names. 


• You can have two names where one of them is a backup and finalize one at the time of registration.


Obtain your digital signature certificate


Once you have registered your name and got it approved by MCA, you should obtain a digital certificate.


A digital certificate is a form that acts as proof of your registered business by holding information about its name, address, pin code, contact details, date of certificate issuance, and approved authority’s signature.


A digital certificate is mandatory for e-filing as it allows you to fill out incorporation documents and sign them electronically. In later stages, you will use them for GST registration and tax filing.


Hence, for digital authentication and fulfilling statutory norms made by MCA, obtaining the digital certificate is necessary. 


To obtain this, you will need to submit an ID proof with a photo, address proof, and the digital certificate application form.


Many government agencies offer digital certificates when you approach them. Here are some links you can apply through E-mudra, IDRBT, National Informatics center.



Apply and get the Director Identification Number (DIN)


DIN is the unique number assigned to all directors of a registered company. You can get access to incorporation documents and file them only after you get your DIN number approved.


This number will have 8 digits which the director is supposed to use along with their signature. This number is valid for a lifetime.


No matter how many companies a director works for, they are eligible to get only one DIN.


Forms you should fill and submit for the different scenarios are,


SPICE form - To request a new DIN for assigning new directors for a business that’s about to be registered.


Dir - 3 form - The company is already registered and it is requesting a DIN to be allotted for the director they appoint.


Dir - 6 form - For making changes in the given information about directors’.


You should submit the form online through the MCA portal after digitally signing them.


Along with the application form include the director’s ID and address proof, and a photograph.


Writing Memorandum of Association (MOA)


MOA defines the constitution, leadership structure, and directors’ roles and responsibilities of a company.


It also defines in detail the relationship between the company and its stakeholders and how internal management happens.


So, all these must be derived with precision by the company’s early founding members for smooth functioning. 



Writing Articles of Association (AOA)


Both MOA and AOA are crucial constitutional components of a company.


AOA is the subordinate of MOA which defines internal rights (workers' and employees' rights and rules), duties and share capital. It should also contain,


• Meeting minutes and how to conduct organizational meetings


• What is the required qualification to become a director of that company and what are their powers, responsibilities, rights, and salary range?


• How accounting should be documented and how to perform auditing


• What if the company has to be winded up? How to perform it in that case?


• Rules that dividends should follow



2. Application for the incorporation of company


You have successfully completed the prerequisites needed for the startup India registration process.


Explained below is how to register a startup in India and incorporate it as a legal entity successfully.

Gather the list of documents required for startup incorporation in India


Before incorporation, you should have chosen a business structure among private company limited, partnership, or LLP. 


Then gather the listed documents that will be required for the online incorporation application process.



• PAN and TAN (Submit 49a application to obtain PAN and 49b to secure the TAN number).


• Authorized ID and address proof of all directors and shareholders


• Passport-size photograph of all directors and shareholders


• You will also have to attach other forms filled for name reservation, obtaining DIN along with the company incorporation form.  



Once you have all the documents, the incorporation application should be filled out. You can fill out the SPICe form online through MCAs online platform. 


Upon successful submission, the registrant will be granted the certificate of incorporation that proves the existence of their company.


This certificate carries your company’s identification number, director identification number, and PAN. 


Fee waiver policies for registering your company as a private limited company


For small companies, the registration fee to register as a private company is zero under one condition. The company’s authorized capital should be lesser than INR 15 lakhs.


If it lies between INR 15 lakhs and INR 50 lakhs, then the registration fee is INR 2000. The fee waiver is not applicable if it’s not a small company and the registrant will pay INR 36,000.


However, there is a shortcoming with this fee waiver policy. The registered company cannot raise funds up to one year from the date of incorporation. And the fee waiver isn’t applicable to the stamp duty costs.


Post incorporation tasks


After receiving the incorporation certificate, you must do the following.


• Creating a corporate bank account. 


• Applying to register for social security from the Ministry of Labor and Employment, if applicable.


Suggested read: Guide to open business bank account in India

3. Startup India Program


This section explains how to register a startup in India. 

What is the startup India program?


The Startup India program is a flagship initiative by the Indian government to create a more open and inclusive ecosystem for entrepreneurs.


It is currently operated by MCA and DPIIT. It focuses on simplifying the regulations for registered small and medium enterprises and providing funding and incubation support.


Those who finish the startup India registration process can also enjoy patent protection and tax benefits and relaxations. 


They also host incubation and accelerator programs in which you can take part and attend workshops on diverse topics about entrepreneurship.


How to register a startup in India under the startup India program?


The first step is to incorporate a company as a startup. The startup registration in India is so simple and can be done online within a few minutes.


Visit the Startup India registration page and register with your name, email address, and a strong password. Now confirm your account by entering the OTP and finish the registration process.


Once you have registered, you can access their incubation and learning programs and apply to government schemes available for you.



Documents required


Here is the list of documents and proof you should have ready post the basic registration.


• The incorporation certificate you downloaded from the website


• Authorization letter issued by one of the representatives of your firm


• Any proof that states your business plan like a pitch deck, presentation, link to your website, etc.


• If you have obtained funding already, any proof that states it


• List of obtained patents and trademarks


• PAN number


Previously they have included many documents like recommendation letters, sanction letters, Aadhar, GST certificates, and many more. But they have waived them off now.



Get DPIIT recognition


The next step after the startup India registration process is to gain DPIIT recognition. DPIIT denotes the Department for Promotion of Industry and Internal Trade.


By gaining this recognition, you can enjoy the following benefits.


• Get tax exemption up to 3 years from the date of registration under section 56 of the income tax act.


• Get exclusive access to intellectual property services


• Get funding assistance from investors


• Enjoy relaxed and less stringent public procurement norms


• Tax exemption when you make investments above the market value


If you are logged into the startup India website, click on ‘DPIIT recognition for startups’ and later ‘Get recognized’. You will see the startup recognition form that reads the eligibility to qualify for this. 


Fill in your company and director details in the form, submit the required documents, make sure you accept the terms and conditions and submit the startup registration India form.


If you have uploaded wrong or illegitimate documents, you will have to pay a fine of 50% of your startup’s paid-up capital amount (The minimum fee itself is INR 25,000).



Receive your recognition number


After registering your startup in the Startup India platform, you will get a unique recognition number.


The startup India team will take up to two days to review your application and get back to you with your recognition number. 



Tax exemption declaration


Upon finding out how to register a startup in India and fulfilling the process, you can declare your startup for tax exemption under section 80C of the Income Tax Act.


In order to be eligible for this tax exemption feature, your registered Indian startup should meet the following requirements.


• Your company should be a recognized startup entity


• It should have been incorporated as a private company limited or limited liability partnership.


• The incorporation should have happened after April 1, 2016.


You can apply for 80IAC within the startup registration India website itself and check the application status there too.


Once your application gets through and the exemption is declared, you are free from paying taxes for three years from the date of its incorporation.


If you have DPIIT recognition, you are also eligible for the angel tax exemption under section 56 of the income tax act. 


Along with the DPIIT recognition, your startup aggregate capital value shouldn’t exceed INR 25 crores too and so as the share premium for the proposed issue of shares.



Self-certification


In general, business certifications aren’t easy to get. With self-certification available through the startup registration India program, startups can self-certify their compliance with the help of a mobile app and demonstrate their adherence to nine labor and six environmental laws. 


Upon successful self-certification, startups will be free from inspection related to labor laws compliance for a time period of three to five years.


In order to fill out the form, startups have to log in to the ShramSuvidha portal.

4. Other registrations


Startup registration in India can also help you with obtaining and managing your intellectual property, like patencies. Here is how you can avail this.


Patents - Obtaining a patent can get too expensive. But the startup India portal contains a list of facilitators who can do this for you and you only have to pay the statutory fees.


Here is the list of facilitators that are published on the website.

Funding assistance


Due to cut-throat competition among startups from similar industries, getting funded in India is becoming a competitive task.


But funding is crucial, without which you won’t be able to expand your team, rectify product glitches, access superior business services, or work on marketing and sales strategies. 


Startup India program has a solution for this as they enable seed-level funding and access to capital for startups through the fund of funds scheme and startup seed funding scheme. 


They have investors lined up who you can find and contact through the platform and receive funds for your small business.



Startup Fund of funds scheme (FFS)


The startup India has initiated a fund formation of INR 10,000 crores to invest in investment firms and venture capital companies which in turn will invest in the startups with the DPIIT recognition.


This fund is called the Fund of Funds.


The Fund of Funds will not directly go to startups but will be invested in incubators and investment firms that are registered at SEBI (Securities and Exchange Board) and at this stage, the funds are called ‘daughter funds’. 


The startup India foundation has given full authority to SIDBI (Small Industries Development Bank of India) to oversee how the funds are disbursed and what startups utilize at the end.


Startups from any stage are qualified to get funded through this scheme.


The main goal of this fund of funds scheme is to nurture a catalyzing funding effect where both startups and investors get benefited at the same time.



Startup India Seed fund scheme


Startup India scheme has been developed by DPIIT with an outlay of INR 945 crores that will be assigned to startups for their product development, market-entry, company expansion, and proof of concept.


This scheme is mainly focused on early-stage growth and push up them to a level where they qualify for getting a bank loan or aid from financial institutions.


Once you get DPIIT recognition, you can register at the Seed fund startup registration India website with your DPIIT credentials.


To qualify for the funding, your startup shouldn’t be older than two years old.

Benefits of registering under the Startup India Program


Most entrepreneurs look for information on how to register a startup in India when they get to know the unlimited benefits it comes with. 


Other than funding, learning, and incubation assistance, you can enjoy taxation deduction benefits too.

Tax exemption


Small businesses that have finished the startup India registration process and obtained the DPIIT recognition certificate are entitled to 100% tax immunity for 3 years.


They can enjoy the tax holiday period and also obtain a 20% tax exemption on capital gains.


Capital gains are taxes a company is liable to pay when they sell its stocks and company-owned assets. 


EPF contribution from the Indian government


For companies with lesser than 100 employees where more than 90% of the employees are paid less than INR 15,000, the government credits 8.33% of EPF into the employees' account for three years since registration. Companies register themselves with EPPO to make use of this advantage.



Presumptive tax scheme


This scheme is designed to relieve small business owners and taxpayers from the pain of maintaining books and records and preparing for audits.


Some companies spend a lot and pay bookkeepers to do this task. When they register under this scheme and prescribe their income at a stipulated level, they don’t have to maintain accounts.


Any small business whose annual turnover is within INR 2 crores is eligible to register under this scheme. 



Obtaining a loan and bank account


A corporate bank account is what you need to sort your company finances and accounting and not mix them up with personal money management.


But opening a corporate account isn’t easy when you don’t go through the startup India registration process.


In order to complete the documentation and KYC verification, you should have made the startup registration in India. 


Also when you start finding answers for how to register a startup in India, you also make way for additional funds your way.


Creating a corporate bank account is the first step to start approaching banks for business loans.

FAQs

Can a One-Person Company (OPC) enjoy the incentives under the Startup India Initiative?

When only one person runs and owns a business, it is called One Person Company. And yes. One person company is allowed to go through the Startup India registration process and enjoy the benefits.

What is the timeline for receiving a startup recognition certificate?

Once you submit the application for obtaining the DPIIT recognition certificate, you can expect that to be delivered within two working days. 

Can a foreigner be registered under with Startup India initiative?

For the time being, interested foreign business owners are only allowed to register on the platform. The startup India foundation is working on extending its serviceability border and making this scheme available to global entrepreneurs and stakeholders.

Get quick access to business bank account for your startup