Startups - what you need to know?

 

Startups in India can be registered under the Companies Act, 2013 in the following forms:

  • Private Limited Company (PLC) [Most Preferred]

  • Limited Liability Partnership (LLP)

  • One Person Company (OPC)

A startup is usually incorporated as a Private Limited Company (PLC) due to benefits such as limited liability, easy fundraising, and better credibility.


Definition of a Startup (As per DPIIT & Companies Act)

A company is recognized as a startup if:

  • It has been incorporated for less than 10 years.

  • Its annual turnover does not exceed ₹100 crore in any financial year.

  • It is working towards innovation, development, improvement of products/processes/services, or has a scalable business model with high growth potential.

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

Recognition is provided by the Department for Promotion of Industry and Internal Trade (DPIIT).


Benefits for Startups under the Companies Act & Government Policies

✅ Tax Benefits – Startups recognized by DPIIT can avail a 3-year tax holiday under Section 80-IAC of the Income Tax Act.
✅ Fast-Track Patent & Trademark Registration with 80% rebate on patent filing fees.
✅ Winding Up Process – Recognized startups can opt for fast-track exit within 90 days under the Insolvency & Bankruptcy Code (IBC), 2016.


A startup will lose its startup status if:
❌ It crosses 10 years from incorporation.
❌ Its turnover exceeds ₹100 crore in any year.
❌ It ceases to work towards innovation or scalable business growth


Kerala specific initiatives:-

Kerala Startup Mission (KSUM) is the central agency of the Government of Kerala dedicated to fostering entrepreneurship and nurturing startups within the state

  • KSUM oversees approximately 40 incubators across Kerala, collectively providing nearly 1 million square feet of incubation space. These incubators offer essential infrastructure, mentorship, and resources to startups
  • KSUM has set up Fab Labs equipped with advanced digital fabrication tools, enabling startups to rapidly prototype and develop products. Notably, the Super Fab Lab in Kochi, established in collaboration with MIT, is the first of its kind outside the USA, offering enhanced capabilities for hardware innovation


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