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    Apr 6, 2016

    FAQs on Start Up India Scheme

    Department of Industrial Policy and Promotion issued FAQs on Start up India scheme. 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'.

    1.For Startups
    #
    Question
    Response





    1.
    What qualifies as a “Startup” for the
    An entity (Private Limited Company or Registered Partnership Firm or Limited Liability Partnership) shall be


    purpose of Government schemes?
    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.





    2.
    How does a Startup obtain benefits under
    For availing various benefits (except tax and IPR related benefits i.e. action points #4, #9, #10 and #11 of


    various Government schemes including
    the Startup India Action Plan), an entity would be required to be recognized as a Startup by applying on


    the ones announced in the Action Plan on
    Startup India Mobile App/ Portal.


    January 16, 2016?





    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.





    3.
    For how long would recognition as a
    An entity would cease to be a 'startup' upon expiry of:


    “Startup” be valid?
    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.





    4.
    Can an existing entity register itself as a
    Yes, an existing entity that meets the criteria as indicated in response to Question 1 can visit the Startup


    “Startup” on the Startup India Portal and
    India Portal and Mobile App and get itself recognized for various benefits. The tax benefits proposed under


    Mobile App?
    the Finance Bill 2016 will be available from 01-04-2016.





    5.
    What is the timeframe for obtaining
    The process of registration in such cases shall be real time and the certificate of recognition would be


    certificate of recognition as a “Startup” in
    issued immediately upon successful submission of the application.


    case an entity already exists?














    #
    Question
    Response





    6.
    An entity is yet to be registered/
    There are two options available in such cases.


    incorporated. Can I visit the Startup India
    a)
    Option 1: An entity can register itself through MCA or Registrar of Firms using the existing processes


    Portal and Mobile App to register/

    and subsequently register itself on the Startup India portal and mobile app as a “Startup” to avail the


    incorporate my entity as either a Private

    benefits.



    Limited Company or Registered
    b)
    Option 2: An entity can register itself through the Startup India portal and mobile app using a seamless


    Partnership Firm or Limited Liability

    process. This facility would be made available in the second phase of the Startup India portal and


    Partnership?

    mobile app launch.





    7.
    What documents would qualify as a
    One of the following documents is required to be uploaded along with the application for registration as a


    supporting document to the application
    Startup on Startup India portal and mobile app:


    to register as a “Startup”?
    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.





    8.
    Do I need to print an application form and
    No. The application has to be submitted online only.


    submit the physical copy of the same to




    complete the process of Startup




    registration?







    9.
    Once my registration is successful, would
    Yes. On successful registration, you would be able to download a system generated verifiable certificate of


    I obtain a certificate for it? If Yes, would I
    recognition.


    be able to download the certificate?
















    #
    Question
    Response





    10.
    If an incubator rejects an application, can
    Yes. In such cases, an entity can apply again to the same incubator that rejected the application, as well as


    the entity apply again to the same
    any other incubator.


    incubator or would it be required to apply



    at a different incubator?






    11.
    If during the Registration process, an
    Yes. In such cases, option to opt for such benefits may be indicated at a later stage as well.


    applicant marks the response to “Do you



    want to avail Tax and IPR benefits” as
    Once a user opts for availing the benefits, his/ her application would be evaluated by the Inter-Ministerial


    “No”, would I be allowed to change the
    Board. Once certified by the Board, the benefits may be availed.


    response to “Yes” later?






    12.
    If an entity does not have a PAN. Would I
    Yes. An entity without a PAN can be registered as a Startup. However, it is advised that a valid PAN of the


    be allowed to register my entity as a
    entity is provided at the time of registration, as each entity is separately taxable person.


    “Startup”?






    13.
    Can I provide two mobile numbers in the
    It is advised that only one mobile number of the authorized representative of the entity is provided at the


    registration form?
    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.





    14.
    Is there any specified format for obtaining
    Yes. The prescribed formats for recommendation/ support/ endorsement letters are published on Startup


    a recommendation letter?
    India portal.





    15.
    If an entity has filed for a patent that has
    In such cases, valid copy of the published patent would suffice as a supporting document.


    been published. In this regard, which



    document would suffice as a supporting



    document to register the entity as a



    “Startup”?






    16.
    What will be the constitution of the Inter-
    The Inter-Ministerial Board of Certification would consist of:



    Ministerial Board?
    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.





    17.
    How would the Inter-Ministerial Board
    The Board shall review the supporting document(s) provided to ascertain if the entity qualifies as an eligible


    review the applications received for the
    business for availing tax/ IPR benefits.


    purpose of tax/ IPR benefits?
















    3 | P a g e


    #
    Question
    Response



    18.
    What is the timeframe for obtaining
    An application for a certificate from the inter-ministerial board shall be processed within a period of 10-25

    certification of Inter-Ministerial Board for
    working days.

    availing tax/ IPR benefits in case an entity


    already exists?




    19.
    Can entities that do not have any of the
    No. One (1) of the six (6) prescribed supporting material is mandatory to make an application to the Inter-

    other evidences like incubator certificate,
    Ministerial Board.

    funding from registered VCs or patents


    still apply to Inter -Ministerial Board for


    tax exemptions?





    2.For Incubators providing Recommendation/ Support/ Endorsement Letter to Startups
    #

    Question
    Response







    1.
    Which incubators are authorized to
    As per the notification no. G.S.R 180(E) dated February 17, 2016, an incubator must fall in one of the



    provide a recommendation/ support/
    following categories to be authorized to provide a recommendation/ support/ endorsement letter to an



    endorsement letter?
    entity:






    a) Incubator established in a post-graduate college in India






    b) Incubator funded by Government of India or any State Government as part of any specified scheme to





    promote innovation






    c) Incubator recognized by Government of India





    With regards to (c), an incubator shall be recognized by DIPP on application.







    2.
    Our incubator does not feature in the
    In such cases, you can make an application at Startup India portal.



    list(s) of incubators published on Startup




    India portal. How can we get it included in
    Once an incubator application is found eligible, the name of the incubator shall be included in the



    the list(s)?
    appropriate list(s) by DIPP.







    3.
    What are the aspects that need to be
    An incubator is required to validate if the entity under review is working towards innovation, development,



    reviewed before issuing a
    deployment or commercialization of new products, processes or services driven by technology or



    recommendation/ support/ endorsement
    intellectual property if it aims to develop and commercialize:



    letter?
    a) A new product or service or process; OR






    b) A significantly improved existing product or service or process that will create or add value for





    customers or workflow.





    The following activities are not considered as a valid case for issuing a recommendation/ support/





    endorsement letter:






    a) Products or services or processes which do not have potential for commercialization; OR






    b) Undifferentiated products or services or processes; OR






    c) Products or services or processes with no or limited incremental value for customers or workflow.







    4.
    Is there any specific format in which an
    Yes. The prescribed formats for recommendation/ support/ endorsement letters are published on Startup



    incubator would be required to provide
    India portal.



    recommendation?








    5.
    Is there any prescribed fee(s) that can be
    No fee is prescribed by the Government. However, the incubators may considering the efforts involved in



    charged from the Startups for providing
    the process charge a fee.



    them with a recommendation/ support/




    endorsement letter?






















    #
    Question
    Response



    6.
    Can we recommend/ endorse an idea that
    Yes. An incubator featured in any of the lists on Startup India portal, can endorse an idea/ Startup not

    has not been incubated at our incubator?
    incubated in such incubator. The objective of the recommendation is to validate that a Startup is involved in


    an eligible business.



    7.
    Do we need to designate someone to
    An incubator is encouraged to designate its officer(s) to sign/ issue the recommendation/ support/

    sign/ issue the recommendation/
    endorsement letter to entities, and share the same with DIPP.

    endorsement letter?




    8.
    What process needs to be followed for
    There is no prescribed format for receipt of application. It is expected that incubator will capture the

    receiving applications from entities not
    process and innovative nature of business before making a recommendation.

    incubated at our incubator?




    9.
    Who will upload the recommendation/
    The entity receiving the recommendation/ support/ endorsement letter will upload the relevant documents

    support/ endorsement letter on the
    at the time of applying for recognition.

    Startup India portal and mobile app?




    10.
    Is there any liability on a recommender/
    Where a recommendation is issued by an incubator without proper examination or without itself satisfying

    incubator?
    about the innovative nature of the business it shall be blacklisted from giving any future recommendation or


    receiving any benefit from Government. Any such action shall, however, be taken only after a due


    opportunity is given to the incubator.



    3.For Funding Bodies providing Recommendation/ Support/ Endorsement Letter to Startups
    #

    Question
    Response







    1.
    Which are the bodies and agencies that
    As per the notification no. G.S.R 180(E) dated February 17, 2016, Alternate Investment Funds, Venture



    fall under the category of “Funding
    Capital Funds, Angel Fund and Seed Funds registered with SEBI will be eligible for providing



    Bodies”?
    recommendation/ support/ endorsement letter to entities in which not less than 20 percent equity is taken





    up by such funds.





    A list of SEBI registered VCFs and AIFs has been published on Startup India portal





    (http://startupindia.gov.in)







    2.
    Is there any specific format in which a
    Yes. The prescribed formats for recommendation/ support/ endorsement letters are published on Startup



    funding body would be required to
    India portal.



    provide recommendation?








    3.
    What are the aspects that need to be
    A funding agency is required to validate if the entity under review is working towards innovation,



    reviewed before issuing a
    development, deployment or commercialization of new products, processes or services driven by



    recommendation/ support/ endorsement
    technology or intellectual property if it aims to develop and commercialize:



    letter?
    a) A new product or service or process; OR






    b) A significantly improved existing product or service or process that will create or add value for





    customers or workflow.





    The following activities are not considered as a valid case for issuing a recommendation/ support/





    endorsement letter:






    a) Products or services or processes which do not have potential for commercialization; OR






    b) Undifferentiated products or services or processes; OR






    c) Products or services or processes with no or limited incremental value for customers or workflow.







    4.
    Can we recommend/ endorse an idea that
    No. Only those ideas/ Startups can be recommended in which not less than 20 percent of the equity is



    has not been funded by our funding
    funded by recommending fund.



    body?








    5.
    Do we need to designate someone as a
    A funding agency is encouraged to designate its officer(s) to sign/ issue recommendation/ support/



    recommender or anyone from our staff
    endorsement letter to entities, and share the same with DIPP.



    can be a recommender?








    6.
    Who will upload the recommendation/
    The entity receiving the recommendation/ support/ endorsement letter will upload the relevant documents



    support/ endorsement letter on the
    at the time of applying for recognition.



    Startup India portal and mobile app?






















    #

    Question
    Response





    7.
    Is there any liability on a recommender?
    Where a recommendation is issued by a fund without proper examination or without being satisfied about



    the innovative nature of the business it shall be blacklisted from giving any future recommendation.



    Where a recommendation is given without actually funding equity (not less than 20 percent equity) of the



    Startup, DIPP may initiate criminal proceedings against the principal officers of the fund for providing wrong



    information.

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