What qualifies as a “Startup” for the purpose of Government schemes?
An entity (Private Limited Company or Registered Partnership Firm or Limited Liability Partnership) shall be considered a “Startup” –
- Upto 5 years from the date of its incorporation/ registration, and
- If its turnover for any of the financial years has not exceeded INR 25 crore, and
- It is working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property.
The entity should not have been formed by splitting up or reconstruction of a business already in existence. A proprietorship or a public limited company is not eligible as startup. A one person company, being a private limited company is entitled to be recognized as a ‘startup’.
For additional information, refer notification G.S.R. 180(E) dated February 17, 2016.
How does a Startup obtain benefits under various Government schemes including the ones announced in the Action Plan on January 16, 2016?
For availing various benefits (except tax and IPR related benefits), an entity would be required to be recognized as a Startup by applying on Startup India Mobile App/ Portal.
In order to obtain tax and IPR related benefits, a Startup shall be required to be certified as an eligible business from the Inter-Ministerial Board of Certification.
For how long would recognition as a “Startup” be valid?
An entity would cease to be a ‘startup’ upon expiry of:
- 5 years from the date of its incorporation/ registration, OR
- If its turnover for any of the financial years has exceeded INR 25 crore; OR
Startups would be required to intimate DIPP of any such cases within a period of 21 days.
Can an existing entity register itself as a “Startup” on the Startup India Portal and Mobile App
Yes, an existing entity that meets the criteria as indicated in response to Question 1 can visit the Startup India Portal and Mobile App and get itself recognized for various benefits. The tax benefits proposed under the Finance Bill 2016 will be available from 01-04-2016.
What is the timeframe for obtaining certificate of recognition as a “Startup” in case an entity already exists?
The process of registration in such cases shall be real time and the certificate of recognition would be issued immediately upon successful submission of the application.
An entity is yet to be registered/ incorporated. Can I visit the Startup India Portal and Mobile App to register/ incorporate my entity as either a Private Limited Company or Registered Partnership Firm or Limited Liability Partnership?
There are two options available in such cases.
- Option 1: An entity can register itself through MCA or Registrar of Firms using the existing processes and subsequently register itself on the Startup India portal and mobile app as a “Startup” to avail the benefits.
- Option 2: An entity can register itself through the Startup India portal and mobile app using a seamless process. This facility would be made available in the second phase of the Startup India portal and mobile app launch.
What documents would qualify as a supporting document to the application to register as a “Startup”?
One of the following documents is required to be uploaded along with the application for registration as a Startup on Startup India portal and mobile app:
- recommendation (with regard to innovative nature of business), in a format specified by Department of Industrial Policy and Promotion, from any Incubator established in a post-graduate college in India; or
- letter of support by any Incubator which is funded (in relation to the project) from Government of India or any State Government as part of any specified scheme to promote innovation; or
- recommendation (with regard to innovative nature of business), in a format specified by Department of Industrial Policy and Promotion, from any Incubator recognized by Government of India; or
- letter of funding of not less than 20 percent in equity by any Incubation Fund/ Angel Fund/ Private Equity Fund/ Accelerator/ Angel Network duly registered with Securities and Exchange Board of India that endorses innovative nature of the business. Department of Industrial Policy and Promotion may include any such fund in a negative list for such reasons as it may deem fit; or
- letter of funding by Government of India or any State Government as part of any specified scheme to promote innovation; or
- patent filed and published in the Journal by the India Patent Office in areas affiliated with the nature of business being promoted.
The list of incubators recognized for the purpose of (a), (b) and (c) are published on the Startup India portal for reference.
The list SEBI registered funds for the purpose of (d) is also available on the Startup India portal.
Do I need to print an application form and submit the physical copy of the same to complete the process of Startup registration?
No. The application has to be submitted online only.
Once my registration is successful, would I obtain a certificate for it? If Yes, would I be able to download the certificate?
Yes. On successful registration, you would be able to download a system generated verifiable certificate of recognition.
If an incubator rejects an application, can the entity apply again to the same incubator or would it be required to apply at a different incubator?
Yes. In such cases, an entity can apply again to the same incubator that rejected the application, as well as any other incubator.
If during the Registration process, an applicant marks the response to “Do you want to avail Tax and IPR benefits” as “No”, would I be allowed to change the response to “Yes” later
Yes. In such cases, option to opt for such benefits may be indicated at a later stage as well. Once a user opts for availing the benefits, his/ her application would be evaluated by the Inter-Ministerial Board. Once certified by the Board, the benefits may be availed.
If an entity does not have a PAN. Would I be allowed to register my entity as a “Startup”?
Yes. An entity without a PAN can be registered as a Startup. However, it is advised that a valid PAN of the entity is provided at the time of registration, as each entity is separately taxable person.
Can I provide two mobile numbers in the registration form?
It is advised that only one mobile number of the authorized representative of the entity is provided at the time of registration. The portal and the mobile app would be sending an OTP on the mobile number provided for the user to complete authentication and registration process.
Is there any specified format for obtaining a recommendation letter?
Yes. The prescribed formats for recommendation/ support/ endorsement letters are published on Startup India portal
If an entity has filed for a patent that has been published, which document would suffice as a supporting document to register the entity as a “Startup”?
In such cases, valid copy of the published patent would suffice as a supporting document
How would the Inter-Ministerial Board review the applications received for the purpose of tax/ IPR benefits?
The Board shall review the supporting document(s) provided to ascertain if the entity qualifies as an eligible business for availing tax/ IPR benefits.
What is the timeframe for obtaining certification of Inter-Ministerial Board for availing tax/ IPR benefits in case an entity already exists?
An application for a certificate from the inter-ministerial board shall be processed within a period of 10-25 working days.
Can entities that do not have any of the other evidences like incubator certificate, funding from registered VCs or patents still apply to Inter -Ministerial Board for tax exemptions?
No. One (1) of the six (6) prescribed supporting material is mandatory to make an application to the Inter-Ministerial Board.