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Why Is It Important For Start-Ups To Get DPIIT Recognition

A start-up is a new business or company. Startups are basically formed by one or more business/company owners who want to provide a good service for which they believe there is a market. Committed business owners strive to create unique, useful solutions for their clients through their start-up businesses.

The company must emphasize the target market, the USP, and the competitive landscape. Now, before starting a business or a company, there are a few important things that a company/business must consider. Before beginning, consider its location of operations, as well as the legal structure and risks surrounding that company, one of those important tasks is getting DPIIT recognition, which is our main focus in this article.

In 2016, the government of India launched an initiative called the "startup India scheme", the main aim of this scheme is to promote new businesses leading to employment growth. Now under the startup scheme, the department for the promotion of industry and internal trade also known as DPIIT is a body that recognizes startups and provides them with some benefits availed under the start-up schemes.

The department was established in 1995 and was reconstituted in the year 2000 with the merger of the Department of Industrial Development. The Department of Industrial Policy and Promotion was then later renamed DPIIT in January 2019.

In 2018, the Department was given charge of e-commerce matters, and in 2019, the Department was given charge of Internal Trade, the welfare of traders and their employees, and Startups.

The role of DPIIT is to promote/accelerate the country's industrial development by facilitating investment in new and emerging technology, foreign direct investment, and supporting balanced industry development.

Now in order for a startup or new business to get recognized by the department for the promotion of industry & internal trade, must follow some procedures and criteria and meet the required eligibility procedures for a startup, and some of them are as follows:

Eligibility Criteria:
  1. Company age:
    A startup seeking DPIIT recognition, must have been in operation for no more than ten years from the date of incorporation.
  2. Type of startup:
    The company or start-up must have been incorporated under the companies act 2013, as a private limited company or one-person company, or under the partnership act 1932 as a Registered firm or a limited liability partnership act 2008 as an LLP.
  3. Annual turnover:
    The startup looking to get recognized by DPIIT, should at least have an annual turnover of at least 100 crore rupees, not exceeding the financial years since its incorporation.
  4. An original entity:
    The start-up should not be a formation of an entity that has been involved in the division or reconstruction of an already existing firm.
  5. Startup should be innovative:
    The start-up should be able to strive to produce or improve a good, method, or service, and/or have a scalable and flexible business plan with lots of potentials to make money and create employment opportunities.

If your startup company has completed the above criteria then the start-up can proceed to get the DPIIT recognition certificate, and some of the procedures are as follows:
  1. The first stage in obtaining DPIIT recognition is to register the startup as any type of entity, such as a partnership, LLP, or company.
  2. The following stage is to submit the application to Startup India by completing an online procedure with the necessary information and attaching the necessary paperwork/documents.

    The following information of the entity must be included in the application such as:
    • Nature of the entity
    • Industry
    • Sector
    • Categories
    • Full address of the entity
    • Registration date
    • Incorporation number
    • Full details of authorized representatives
    • Directors and partners of the startup
    • Intellectual property rights
    • And lastly funding details
  3. The third step is to upload documents like the firm's incorporation certificate, a questionnaire, and any awards the company has received. These documents must all be properly uploaded.
  4. Before you apply for recognition under DPIIT, ensure that all the documents and information are properly certified.

The DPIIT certificate of recognition for Startups will be issued after the application and the necessary documents have been submitted and reviewed. Once the entities are registered, they are permitted to submit online applications through the DPIIT G2B site, where anyone may also ask questions about their business, make a pitch, submit an application for a license, and maintain track of past licenses and filed applications.

Benefits Given To Those Startups Recognized Under DPIIT:
  1. Self-Certification
    After receiving the DPIIT Certificate of Recognition for Startups, your company will be able to certify its own compliance with three environmental laws and six labor laws.
  2. Tax Exemptions
    A number of tax exemptions are available to startups recognized by DPIIT. Any startup may apply for Tax Exemption under Section 80 IAC of the Income Tax Act after acquiring the Certificate of Recognition.

    Also, recognized startups are eligible to apply for the Angel Tax Exemption.

    The DPIIT-recognized startups are eligible for exemption from income tax (provisions of section 56 (2) (viib) of the income tax act) for three consecutive financial years at any time throughout their first 10 years of business after establishment if the tax exemption clearance is achieved.
  3. Start-Up Patent Application:
    The DPIIT-approved startups will be eligible for fast-tracking of a patent application and will only be required to pay 80% of the costs for patents, trademarks, copyrights, and designs.
  4. Simpler Public Procurement Guidelines:
    • Startups that have been approved by DPIIT will have the chance to list their goods on the government e-Marketplace.
    • Startups that are DPIIT-recognized are excluded from submitting an earnest money deposit.
    • All Central Government ministries and divisions offer Start-Ups an exemption from Prior Experience/Turnover.
  5. Funds Of Funds:
    The startups would be eligible for cash from the Alternative Investment Funds totaling Rs. 10000 crores.
  6. Fund For Credit Guarantee:
    Through the National Credit Guarantee Trust Company or SIDBI, startups can obtain an Rs. 20000 crore Credit Guarantee fund over a period of four years.
As a start-up looking to get more recognition, it is very beneficial to get registered under DPIIT. One of the major reasons startups should get their company or entity registered under the DPIIT recognition board is to attain the benefits listed above in this article.

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