Honorable Prime Minister Narendra Modi initiated a plan in January 2016 to grow startups in India. Several incentives, programs, and exemptions have been announced to raise startups in the country. The flagship Startup India aims to create a favorable ecosystem for entrepreneurship in the country.
An entity registered or incorporated in India within not less than 5 years and holds an annual turnover not less than Rs 25 crores in any financial year while working towards development, deployment, innovation, or commercialization of new products, can be declared a startup. In addition, this entity must not have been formed from the reconstruction or splitting up of any pre-existing business.
The Department of Industrial Policy and Promotion (DIPP) is looking after startup registration. To become worthy of being called a startup and receive a nod from the Inter-Ministerial Board, the company with Pvt Ltd Company Registration should aim to develop and commercialize a new service or product. It may also improve the product or service or possibly add value for the final customers. Products, processes, and services that cannot be commercialized or differentiated and do not have incremental value are not considered under Startup India.
So to validate its eligibility, the startup must be supported by:
Only when one of the above criteria is fulfilled does the company with Pvt Ltd Company Registration get listed under the Startup India Action Plan. As mentioned earlier in this article, the Inter-Ministerial Board by DIPP will validate the business's innovativeness to consider it eligible for tax exemption. However, the approval will not free the business from any liability accrued due to fraud or misinterpretation due to the submission of such an application.
Once the tax exemption is approved, for the first 3 years of business, startups will have a 100% income tax rebate on all profits. The condition of this approval is that the annual turnover of the startup should not be more than INR 25 Crore.
The DIPP consists of the following persons: