Startup - Defined by Government of India


Ajit Kumar AJIT KUMARWISDOM IAS, New Delhi.

Department of Industrial Policy and Promotion (DIPP, part of the Ministry of Commerce and Industry, Government of India) came up with an ‘Action Plan on Startup’ in January 2016. The Action Plan aimed at creating a conducive environment for startups in India. 

A startup has been defined as an entity, incorporated or registered in India not prior to five years, with annual turnover not exceeding INR 25 crore in any preceding financial year, working towards innovation, development, deployment or commercialisation of new products, processes or services driven by technology or intellectual property.

The entity should not be formed by splitting up, or reconstruction, of a business already in existence.
Further, entity will cease to be a startup if its turnover for the previous financial year has exceeded INR 25 crore or it has completed 5 years from the date of incorporation/registration.

The startup will be eligible for tax benefits only after it has obtained certificate of an eligible business from the Inter-Ministerial Board of Certification consisting of various bodies, set up by DIPP to validate the innovative nature of the business for granting tax related benefits.

 An entity shall be considered as a ‘startup’:

- Up to five years from the date of its incorporation/registration,
- If its turnover for any of the financial years has not exceeded INR 25 crore, and
- It is working towards innovation, development, deployment or commercialisation of new products, processes or services driven by technology or intellectual property.

 Meaning of an ‘entity’:

Entity means a –  
- private limited company (as defined in the Companies Act, 2013) or
- registered partnership firm (registered under section 59 of the Partnership Act, 1932) or
- limited liability partnership (under the Limited Liability Partnership Act, 2002).
- The entity should not be formed by splitting up, or reconstruction, of a business already in existence.
- An entity shall cease to be a startup on completion of five years from the date of its incorporation/registration or if its turnover for any previous year exceeds INR 25 crore.
 


Monday, 29th Feb 2016, 02:04:36 PM

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