Startups : Government announces uniform standards and proper definition

Startup : Definition by Governement

Formerly, we told you about the government's new "Startup India and Standup India" and it's definition, but this time government has emerged with a uniform definition of startups under which a fresh entrepreneur with a turnover of less than Rs 25 crore can avail tax breaks and other benefits for a five-year period. 

This proclaim was done by Department of Industrial Policy and Promotion (DIPP) saying that it would bring about "uniformity" and ensure that only genuine startups get the benefits.

According to the government's notification, a startup with  at least 20% equity funding by any incubation, angel or private equity fund, and an accelerator or angel network duly registered with SEBI  and with some innovation will only be able to benefit from the initiative. Companies that fulfil these conditions would only be considered as start-ups up to five years from the date of incorporation till the time that their turnover exceeds Rs 25 crore. 

Also, if the startup desires to obtain any tax benefits, it will be essential to 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).

The startup will also be required to file an application along with any one of the documents listed out in the notification, including a recommendation from an approved incubation centre and a letter of funding of at least 20% by an incubator, angel fund, PE fund that is registered with SEBI. 

The whole process of the registration will be through the mobile app/portal of the DIPP but till the portal is not ready, the DIPP is entitled to make alternate arrangements. 

In order to encourage startups, an expert said the government should provide adequate tax benefits in the forthcoming Budget.

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