On 16th Jan 2016, Prime Minister Mr. Narendra Modi announced bunch of benefits and schemes to promote start-up ecosystem in India. The event was called ‘Startup India, Stand up India’. It has immense importance because, for starters, it was the first of its kind dialogue between India’s startup community and the government.
Startup India is a flagship initiative of the Government of India, intended to build a strong ecosystem for nurturing innovation and Startups in the country. This will drive sustainable economic growth and generate large scale employment opportunities. The Government, through this initiative aims to empower Startups to grow through innovation and design.
In order to meet the objectives of the initiative, Government of India announced an Action Plan that addresses all aspects of the Startup ecosystem. With this Action Plan, the Government hopes to accelerate spreading of the Startup movement from digital/ technology sector to a wide array of sectors including agriculture, manufacturing, social sector, healthcare, education, etc. and from existing tier 1 cities to tier 2 and tier 3 cities including semi-urban and rural areas.
The Action Plan is divided across the following areas:
- Simplification and Handholding
- Funding Support and Incentives
- Industry-Academia Partnership and Incubation
Since the day, the talk on “Start-up India” scheme has started, its been a burning question in each entrepreneur’s mind, whether their venture qualifies for these new schemes and benefits announced. Finally Department of Industrial Policy and Promotion (DIPP), Government of India has clarified which ventures will qualify as Start-up to claim the benefits.
Definition of a Start-up (only for the purpose of Government schemes):
- An entity, incorporated or registered in India
- Not older than five years,
- Annual turnover does 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.
It is important to note following points:
- 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 Start-up 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 Start-up shall be eligible for tax benefits only after it has obtained certification from the Inter-Ministerial Board, setup for such purpose.