Start-Up – The New Privilege Holder

Definition of a Start-Up As Per Law:

 (a) An entity shall be considered as a Startup: 

i. Up to a period of ten years from the date of incorporation/ registration, 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. 

ii. Turnover of the entity for any of the financial years since incorporation/ registration has not exceeded one hundred crore rupees. 

iii. The entity 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 an entity formed by splitting up or reconstruction of an existing business shall not be considered a ‘Startup’ 

Eligibility Criteria for Startup Recognition:

1. The Startup to be eligible for the scheme shall be incorporated as a private limited company or registered as a partnership firm or a limited liability partnership to be eligible for a startup.
2. Turnover should be less than INR 100 Crores in any of the previous financial years
3. An entity shall be considered as a startup up to 10 years from the date of its incorporation and shall have been incorporated within the past 5 years from the date the policy was initiated. A company shall cease to be a start-up after completion of 10 years.
4. The most essential precondition of the entire Startup India Scheme is that establishing a business must develop an entirely new product or service to be recognized as a startup.

This criterion has the following three conditions:

(a) The startup must be working towards – Innovation, Development, Deployment or Commercialization of new products, processes or services, driven by either technology or intellectual property.

(b) The startup must aim to develop and commercialize – A new product or service or a significantly improved existing product or service that will create or add value to customers.

(c) A startup must not be merely engaged in – Developing products or services which do not have the potential for commercialization, undifferentiated products or services, product or services or processes with no or limited incremental value for customers or workflow.

5. It is mandatory for every startup to obtain approval for its innovation by submitting an application to the Inter-Ministerial Board (IBM) set up by the Department of Industrial Policy and Promotion (DIPP). 

6. The headquarters of the business shall be established in India.

Procedure for Recognition as a Start-up

You may visit the official portal of startup India along with the required documents and get yourself registered for free.

 Documents required for registering as a startup

1. Name of the entity - Is the business a Private Limited Company, Limited liability partnership or registered partnership.
2. Industry - The of the industry you are dealing with ( for example -food, fashion, education, etc)
3. Sector - Name of the sector you are dealing with 
4. Categories - You need to choose the appropriate category (for example consulting, consumer internet, engineering, etc)
5. Incorporation/registered no - The incorporation registered no. of the business is to be provided.
6. Pan number - Pan details of the owner or the business subject to conditions
7. Full address office - Full address of the office is to be provided
8. Authorized representative details - Details of the person who is your authorized representative.
9. Directors/Partners Detail - Documents of the Directors/Partners need to be submitted.
10. Information Required ( current no. of employees) - Number of employees working in the business
11. Startup activities - ( If an award or recognition received by the entity) upload award document
12. What is the problem the startup is solving - You need to address detailed activities of your business along with the problems they are solving.
13. What is the uniqueness of your solution - How is your business unique to other businesses.
14. How does your startup generate revenue - A list of activities by which the startup is generating revenue.
15. Registered Certificate - Upload registered certificate of your business

For any further assistance, you may contact Solutions Legalis