Introduction - Vijeta Sharma & Associates -

Startup India is a flagship initiative of the Government of India, intended to catalyse startup culture and build a strong and inclusive ecosystem for innovation and entrepreneurship in India.
Launched on 16th January, 2016, the Startup India Initiative has rolled out several programs with the objective of supporting entrepreneurs, building a robust startup ecosystem and transforming India into a country of job creators instead of job seekers. These programs are managed by a dedicated Startup India Team, which reports to the Department for Industrial Policy and Promotion (DPIIT).

Definition of Startup (only for the purpose of Government schemes) :

Startup means 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 commercialization of new products, processes or services driven by technology or intellectual property.

Provided that such entity is not formed by splitting up, or reconstruction, of a business already in existence. Provided also that an entity shall cease to be a Startup if its turnover for the previous financial years has exceeded INR 25 crore or it has completed 5 years from the date of incorporation/ registration.

Provided further that a Startup shall be eligible for tax benefits only after it has obtained certification from the Inter-Ministerial Board, setup for such purpose.

Key Pillars of Support for Startups:-

Simplification and Handholding :

Easier compliance, easier exit process for failed startups, legal support, fast tracking of patent applications and a website to reduce information asymmetry.

Funding & Incentives:

Exemptions on Income Tax and Capital Gains Tax for eligible startups; a fund of funds to infuse more capital into the startup ecosystem and a credit guarantee scheme.

Incubation & Industry-Academia Partnerships:-

Creation of numerous incubators and innovation labs, events, competitions and grants.

Definition of Terms :-

Term	Definition
Entity	Private Limited Company (under The Companies Act, 2013) or a Registered Partnership Firm (under The Indian Partnership Act, 1932) or Limited Liability Partnership (under The Limited Liability Partnership Act, 2008
Identification of businesses covered under the definition in Part A above	A business is covered under the definition if it aims to develop and commercialize A new product or service or process; A significantly improved existing product or service or process, that will create or add value for customers or workflow. The mere act of developing Products or services or processes which do not have potential for commercialization; or Undifferentiated products or services or processes; or Products or services or processes with no or limited incremental value for customers or workflow would not be covered under this definition. In order for a “Startup” to be considered eligible, the Startup should Be supported by a recommendation (with regard to innovative nature of business), in a format specified by DIPP, from an Incubator established in a post-graduate college in India; or Be supported by an incubator which is funded (in relation to the project) from GoI as part of any specified scheme to promote innovation; or Be supported by a recommendation (with regard to innovative nature of business), in a format specified by DIPP, from an Incubator recognized by GoI; or Be funded by an Incubation Fund/Angel Fund/ Private Equity Fund/Accelerator/Angel Network duly registered with SEBI* that endorses innovative nature of the business; or Be funded by GoI as part of any specified scheme to promote innovation; or Have a patent granted by the Indian Patent and Trademark Office in areas affiliated with the nature of business being promoted. * DIPP may publish a ‘negative’ list of funds which are not eligible for this initiative
Turnover	As defined under The Companies Act, 2013
Inter-Ministerial Board	An Inter-Ministerial Board setup by DIPP to validate the innovative nature of the business for granting tax related benefits Approval from the Inter-Ministerial Board shall not in any manner, limit or absolve the entity(ies) from any liability incurred in case of any misrepresentation/ fraud arising from submission of such application and/ or supporting such application

Introduction