Department of Industrialist Promotion and Promotion ( DIPP) , of India ha released detailed FAQs on every aspect of startups India program. Here is the first set of FAQs on the startups . This is certainly going to help all upcoming startups as the position of government is clear on each issue .
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FAQs by DIPP on General Questions About Startups in India
1. For
Startups
Frequently Asked Questions
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Question
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Response
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1.
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What qualifies as a “Startup” for the
purpose of Government schemes?
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An entity (Private Limited Company or Registered
Partnership Firm or Limited Liability Partnership) shall be
considered a “Startup” –
a) Upto
5 years from
the date of
its incorporation/ registration, and
b) If its turnover for any of the financial years has not exceeded INR
25 crore, and
c) 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.
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2.
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How does a Startup obtain benefits under
various Government schemes including
the ones announced in the Action Plan on
January 16, 2016?
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For availing various benefits (except tax and IPR related benefits i.e. action points #4, #9, #10 and #11 of
the Startup India Action Plan), 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.
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3.
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For how
long would recognition
as a
“Startup” be valid?
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An entity would cease to
be a 'startup' upon expiry of:
a) 5 years from
the date of
its incorporation/ registration, OR
b) 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.
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4.
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Can an existing entity register
itself as a
“Startup” on the
Startup India Portal and
Mobile App?
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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.
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5.
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What is the timeframe for obtaining
certificate of recognition
as a “Startup” in
case an entity already exists?
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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.
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#
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Question
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Response
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6.
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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?
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There are two options available in such cases.
a) 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.
b) 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.
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7.
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What documents would qualify as a
supporting document to the application
to register as a “Startup”?
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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:
a) 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
b) 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
c) 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
d) 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
e) letter of funding by Government
of India or any State Government as part of any specified scheme to promote innovation; or
f) 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.
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8.
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Do I need to print an application form and
submit the physical copy of the same to complete the
process of Startup registration?
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No. The application has to be submitted online only.
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9.
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Once my registration is successful, would
I obtain a certificate for it? If Yes, would I
be able to download the certificate?
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Yes. On successful registration, you would be able to download a system generated verifiable certificate of
recognition.
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#
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Question
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Response
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10.
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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?
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Yes. In such cases, an
entity can apply again to
the same incubator that rejected the application, as well as
any other incubator.
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11.
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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?
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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.
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12.
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If an entity does not have a PAN. Would I
be allowed to register my entity as
a
“Startup”?
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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.
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13.
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Can I provide two mobile
numbers in the
registration form?
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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.
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14.
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Is there any specified format for obtaining
a recommendation letter?
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Yes. The prescribed formats for recommendation/ support/ endorsement letters are published on Startup
India portal.
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15.
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If an entity has filed for a patent that has
been published. In this regard, which
document would suffice as a supporting
document to register the entity as a “Startup”?
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In such cases, valid copy of
the published patent would suffice as a supporting document.
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16.
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What will be the constitution of the
Inter-
Ministerial Board?
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The Inter-Ministerial Board of Certification would consist of:
a) Joint Secretary, Department of Industrial Policy and Promotion; b)
Representative of Department of
Science and Technology; and c) Representative of Department of
Bio-technology.
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17.
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How would the Inter-Ministerial Board
review the applications received for the purpose of tax/ IPR benefits?
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The Board shall review the supporting document(s) provided to ascertain if the entity qualifies as an eligible
business for availing tax/ IPR benefits.
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#
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Question
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Response
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18.
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What is the timeframe for obtaining
certification of Inter-Ministerial Board for
availing tax/ IPR benefits in case an
entity already exists?
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An application for a certificate from
the inter-ministerial board shall be processed within a period of 10-25
working days.
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19.
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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?
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No. One (1) of
the six (6) prescribed supporting material is
mandatory to make an
application to
the Inter-
Ministerial Board.
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