How long can a Start-up be a Start-up?

How long can a Start-up be a Start-up?

Posted by P. Charitha on October 4th 2016

It’s been 2 years since the Make In India scheme was launched (September 24th 2014) under the aegis of the Department of Industrial Policy and Promotion. India emerged, as the top destination globally for foreign direct investment (FDI), surpassing the United States of America as well as the People's Republic of China after initiation of the programme in 2015.
We figured that it would always be worthwhile to re-visit some main definitions of what a start-up is and the criteria involved for getting any benefits etc.
Defining a STARTUP under Make In India Scheme:
->Startup means an entity, incorporated or registered in India not prior to five years, 
-> With annual turnover 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.
 
NOTE: Now the understanding here is that that an entity shall cease to be a Startup 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 that such entity is not formed by splitting up, or reconstruction, of a business already in existence.
->Provided further that a Startup shall be eligible for tax benefits only after it has obtained certification from the Inter-Ministerial Board, setup for such purpose.
Meaning of Startup Explained: The definition given for Startups under Startup India Stand up India (SISI) Scheme is limited to get benefits under this scheme and is not a general or legal definition given to Startup.
 
Startup Entity/Business must be registered as:
Private Limited Company (under The Companies Act, 2013) or
Limited Liability Partnership (under The LLP Act, 2008) or
Registered Partnership Firm (under The Indian Partnership Act, 1932)

Age of Company:
Company must not be older than 5 years
It means on the date of application for Startup India scheme, the startup must be registered for less than 5 years
Any company registered before the date of announcement of the scheme is also eligible for the Scheme
 
Annual Turnover of Start-ups:
Not more than Rs. 25 crore in any preceding financial year
Highly Innovative Product or Service:
Startup must be working towards innovation, development of new products, processes or services driven by technology or intellectual property

No splitting of existing Company allowed:
It means dividing an existing company and floating a new company to get benefit under Plan is not allowed.

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