Tax Benefits to Startups holding Intellectual Property in India

Eligible companies can be recognised as Startups by the DPIIT under the Startup India initiative, gaining access to a slew of tax advantages, simpler enforcement, IPR fast-tracking, and more.

Fri Jul 01 2022 | Govt. Agencies and Taxation | Comments (0)


The Indian government has recently developed a tax structure designed explicitly for intellectual property rights (IPR). Given the country's rapid economic growth, the need for IPR production is a pressing need. Through a healthy tax structure, IPR can be elevated to the highest level and maximum benefits can be given to inventors, ensuring a culture of innovation in the country. Many startups have been observed not promoting or failing to promote their intellectual property (IP) due to a fear of financial loss or a lack of knowledge. In such startups, a better taxation model may catalyse the research and development of intellectual property properties, and they may consider reviving the IP. A good intellectual property taxation regime and effective royalty policies will also encourage writers and artists to create more original and creative works, as well as increase the number of inventions or know-how transfers into India.

Start Up India, a Government of India (GOI) initiative, was established to make the process of starting a company easier. The following are the program's three primary goals:

This program is organised by the Department for Promotion of Industry and Internal Trade (DPIIT). This scheme focuses on getting rid of the licence raj and simplifying the processes related to land permissions, foreign investment proposals, and environmental clearances.

Eligibility criteria to avail the benefits under Start-up India:

The following examinations must be passed in order to receive benefits under the start-up India scheme:

Benefits available for IPR under DPIIT: In the last few years, India's IPR operation has increased significantly. The number of patents filed has risen by a factor of ten. The ministries have taken a number of steps to ensure that the registered intangible assets are safeguarded.

Scheme for Facilitating Start-Ups Intellectual Property Protection (SIPP)

Tax Benefits for Startups Holding IP

Eligibility criteria for applying for income tax exemption (80IAC) are:

Importance of Registration to get Tax Benefits for IP Holding Startups:

How to apply for IPR benefits:

Businesses must receive a certificate of recognition from DPIIT, according to the Ministry of Commerce and Industry, in order to make doing business easier. This credential would be necessary to access all of the Start-Up India Program's IPR benefits.

How to Avail the Certificate of recognition from DPIIT?

There are two steps that have been set out for you to follow. The first describes a situation in which no patent application has been filed, while the second describes a situation in which a patent application has been filed.

For applicants who have NOT filed an application for Patent. The application form can be found in the registration section of the Start-up India website.
The following information has to be filed

To assist  the application, you'll also need the following documents.

A panel of facilitators has been created to provide assistance and help in the filing of IPR applications. The DPIIT would cover the cost of facilitation.

Applicants who have submitted a patent application

This category describes the process for applicants who have applied for a patent and had it released as a result of their efforts.

When it comes to tax incentives, there are two choices to consider:

  1. Opt out for Tax Benefits- If the sole purpose of your business is to obtain IPR benefits and you want to save time and effort, opting out for tax benefits can be a viable option
  2. If you want to take advantage of tax benefits , the process would be lengthy and time-consuming since the proposal must be evaluated by an Inter-Ministerial commission.

If any false information is  given, or the application is  submitted without any other documents, or a document was forged, the applicant would be fined INR 25,000.

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