Ultimate Guide on Startup India FAQ Series

Ultimate Guide on Startup India FAQ Series

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Ultimate Guide on Startup India FAQ Series
Ultimate Guide on Startup India FAQ Series

Introduction: A company that is in the first stage of its operations. These companies are often initially rolled by their entrepreneurial founders as they attempt to capitalize on developing a service for which they think there is a demand. Due to limited revenue or high costs, most of these small scale operations or not sustainable in the long term without additional funding from venture capitalists.

FAQ Series on Startup India Scheme

  • What qualifies as a “Startup” for the purpose of Government schemes?

An entity (Private Limited Company) and Registered Partnership Firm andLimited Liability Partnership) will be treated a “Startup” –

 a) Upto 5 years from the date of its incorporation/ registration.

b) If its turnover for any of the financial years has not exceeded INR 25 Crore.

c) It is working towards innovation, development, deployment or commercialization of new products, processes or services directed by technology or intellectual property.

The entity should not have been formed by isolate up or reconstruction of a business already in existence. Aproprietorship or a public limited company is not acceptable as startup. A single-person company, being a private limited company is designate to be recognized as a ‘startup’.

  • For how long would recognition as a “Startup” be valid?

An entity would cease to be a ‘startup’ upon closure of:

a) 5 years from the date of its incorporation/ registration.

b) If its turnover for any of the financial years has exceeded INR 25 crore.

Startups would be required to intimate DIPP of any such cases within a period of 21 days.

  • An entity is yet to be registered/ incorporated. Can I visit the Startup India Portal and Mobile Application to register or incorporate my entity as either a Private Limited Company or Registered Partnership Firm or Limited Liability Partnership?

There are two options we have to follow in such cases.

  1. Option 1: An entity can register itself through MCA or Registrar of Firms using the    

Existing processes and subsequently register itself on the Startup India portal and mobile app as a “Startup” toadvantage the interest.

  • Option 2: An entity can register itself through the Startup India portal and mobile app.

This facility would be possibly available in the second phase of the Startup India portal and mobile app launch.

  • What documents would qualify as a supporting document to the application to register as a “Startup”?

 The following document is required to be uploaded along with the application for registration as a Startup on Startup India portal and mobile app:

a) Recommendation (with regard to original nature of business), in arrangement specified by Department of Industrial Policy and Promotion, from any Incubator established in a post-graduate college in India.

b) Letter of backing by any Incubator which is finance (in relation to the project) from Government of India or any State Government as part of any specified scheme to promote innovation.

c) Suggestion (with regard to innovative nature of business), in anarrangement specified by Department of Industrial Policy and Promotion, from any Incubator recognized by Government of India.

d) Letter of funding of not less than 20 percent in equity by any Incubation Fund/ venture Fund/ Private Equity Fund/ Accelerator/ Angel Network duly registered with Securities and Exchange Board of India that approveoriginal 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.

e) Letter of finance by Government of India or any State Government as part of any specified scheme to promote innovation.

f) Patent filed and published in the Journal by the India Patent Office in areas affiliated with the nature of business being promoted.

g) Letter of recommendation (with regard to innovative nature of business), in a format specified by Department of Industrial Policy and Promotion, from any Industry associate.

  • If an entity does not have a PAN. Would I be allowed to register my entity as a “Startup”?

 Yes. An entity without a PAN can be registered as a Startup. After all, it is advised that a valid PAN of the entity is provided at the time of registration, as each entity is separately taxable person.

  • Is there any specified format for obtaining a suggestion letter?

Yes. The recommended formats for suggestion/ support/ endorsement letters are published on Startup India portal.

  • Would a One Person Company (OPC) be acceptable to avail benefits under the Startup India initiative?

Yes. One Person Companies are acceptable to avail benefits under the Startup India initiative.

  • Is partnership firmacceptable for benefits under Startup India scheme?

Yes, a partnership firm is acceptable for all the benefits except tax incentives which are provided to recognized startups.

  • In case where a patent is provided as a proof of original, is there an age limit on the patent?

Yes, a patent which is published and not filed more than 5 years ago can be only considered for application to get registered with DIPP.

  • Can a foreigner enter into partnership under LLP Act & get registered that LLP with StartupIndia?

Yes, a foreign national can enter into a partnership under LLP Act. Also, an LLP can register with Startup India HUB and get recognized by DIPP.

  • What part of cost for filling a patent will have to be borne by startup?

Fee for filing patent application and other statutory fees, as per First Schedule, shall be borne by the startup.

  • I want to use the Startup India logo for branding purpose. What is the procedure to apply for it?

The procedure to apply for Startup India logo is online. Please refer to the link: http://startupindia.gov.in/uploads/pdf/Guidelines_logo.pdf.

Conclusion:

A business needs to have a sound business model and realistic future plans ready, before it plunges into the market.If a business wants to grow really fast, it would probably need outside sources of capital.

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