Under Startup India Scheme 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 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 that such entity is not formed by splitting up, or reconstruction, of a business already in existence.
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.
Meaning of Startup Explained:
The definition given for Startups under Startup India Stand up India (SISI) Scheme is limited to get benefits under this scheme and is not a general or legal definition given to Startup.
It means FlipKart or OLA may be called startups in general, however they will not be eligible to get benefits under Startup Scheme (As their turnover is much higher than Rs. 25 crore).
A) Startup Entity/Business: must be registered as
- Private Limited Company (under The Companies Act, 2013) or
- Limited Liability Partnership (under The LLP Act, 2008) or
- Registered Partnership Firm (under The Indian Partnership Act, 1932)
B) Age of Company:
- Company must not be older than 5 years
- It means on the date of application for Startup India scheme, the startup must be registered for less than 5 years.
- Any company registered before the date of announcement of the scheme is also eligible for the Scheme
C) Annual Turnover of Start-ups:
- not more than Rs. 25 crore in any preceding financial year
D) Highly Innovative Product or Service:
- Startup must be working towards innovation, development of new products, processes or services driven by technology or intellectual property
E) No splitting of existing Company allowed:
- It means dividing an existing company and floating a new company to get benefit under Plan is not allowed