WHAT IS A START-UP?
An entity shall be considered as a Start-up:
a) if it is incorporated as a private limited company (as defined in the Companies Act, 2013) or registered as a partnership firm (registered under section 59 of the Partnership Act, 1932) or a limited liability partnership (under the Limited Liability Partnership Act, 2008) in India; and
b) up to seven years from the date of its incorporation/ registration; however, in the case of Start-ups in the biotechnology sector, the period shall be up to ten years from the date of its incorporation/ registration; and
c) if its turnover for any of the financial years since incorporation/ registration has not exceeded Rupees 25 crores; and
d) if it is working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation.
Provided that any such entity formed by splitting up or reconstruction of a business already in existence shall not be considered a 'Start-up'.
Further Explanation of the above definition includes,
- An entity shall cease to be a Start-up on completion of seven years from the date of its incorporation/ registration or if its turnover for any previous year exceeds Rupees 25 crores. However, in respect of Start-ups in the biotechnology sector, an entity shall cease to be a Start-up on completion of ten years from the date of its incorporation/ registration or if its turnover for any previous year exceeds Rupees 25 crores.
- Turnover is as defined under the Companies Act, 2013.
What is the Process of Recognition?
The process of recognition as a 'Start-up' shall be through an online application made over the mobile app/ portal set up by the Department of Industrial Policy and Promotion. Entities will be required to submit the online application along with the Certificate of Incorporation/ Registration and other relevant details as may be sought.
Start-ups also have to submit a write-up about the nature of business highlighting how is it working towards innovation, development or improvement of products or processes or services, or its scalability in terms of employment generation or wealth creation.
What are the benefits of registration as a startup?
- Self Certification and compliance under 9 environmental & labour laws.
- Access to INR 10,000 crores of funds for investment into Start-ups through Alternative Investment Funds
- Startup Patent Application fast track & up to 80% in filling patents
- INR 2,000 crore credit guarantee fund for Start-ups through National Credit Guarantee Trust Company / SIDBI over 4 years
- Public Procurement-fast track under the criteria of "prior experience/turnover" for Start-ups in all Central Government ministries/departments
- Winding up of Company in 90 days under insolvency & Bankruptcy code 2016
- Tax Exemptions on capital gains & on Investments above Fair Market Value
- Tax Exemptions on Income tax for 3 years (Start-ups are exempted from income tax for 3 years. But to avail these benefits, they must be certified by the Inter-Ministerial Board (IMB). Start-ups recognized by DIPP, Govt. of India can now directly avail IPR related benefits without requiring any additional certification from IMB.)
What are the documents and information required for the application for recognition as a startup?
- Entity Details
- Full Address (Office)
- Authorized Representative Details
- Director(s) / Partner(s) Details
- Information Required
- Current number of employees (including founders)
- What is the current stage of development of your product/service?
- Has your start-up applied for any IPR (Intellectual Property Right)?
- Is the start-up creating an innovative product/service / process or improving an existing product/service / process?
- Is the start-up creating a scalable business model with high potential of employment generation or wealth creation?
- What is the problem the startup is solving?
- How does your startup propose to solve this problem?
- What is the uniqueness of your solution?
- How does your startup generate revenue?
What are the simple steps to recognition / register your startup?
Step- 001 : You must first incorporate your business as a Private Limited Company or a Partnership firm or a Limited Liability Partnership
Step-002: Visit Start-up India Recognition portal for Register with Start-up India.
Step-003: Provide the information Like Organization details, full address of the registered office and List of Directors/ Partners etc.
Step-004: Upload PDF documents.
Step-005: Answer some questions
Step-007: Accept the Terms & Conditions and Submit.
Step 008: Start-up India Team send Certificate after verification of information and documents.
The author can also be reached at firstname.lastname@example.org
Tags :Corporate Law