The term ‘Startup’ has become a buzz word today, but there are many who loosely use the term to define any and every type of new organisation. In order to make the definition of the word ‘startup’ more defined and clearer to the people, the department of industrial policy and promotion (DIPP) has recently issued a notification regarding the same.
The notification states that an organisation can only be considered as a startup for its initial period of five years (this is counted from its date of registration/incorporation) if its turnover for any of the financial years has not crossed the figure of Rs 25 crore and further, if if the organisation is focused towards development, innovation, deployment or commercialisation of new products, services or processes that are spearheaded by intellectual property or technology.
In order for a company to be recognised as a startup, it will have to apply for the same through a mobile app/portal of the DIPP. Since the app/portal is still under construction, the DIPP for the time being is making some alternate arrangements.
Moving forward, if a startup is looking to reap in on any of the tax benefits provided by the state, it will first have to apply and obtain a certificate of an eligible business from the Inter-Ministerial Board of Certification (joint secretary, department of industrial policy and promotion, representative of department of science and technology, and representative of department of biotechnology).
After the certificate is obtained, they will have to file an application along with any one of the documents listed out in the notification issued by the DIPP. Further, they will also have to include a letter of recommendation from an approved incubation centre and a letter of funding of at least 20% by an angel fund, incubator, PE fund which is registered with SEBI.
So, if you think your new organisation completely suits the bill, it’s time to apply for the startup tag right away.