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Uniform Norms For Startups: Government Of India


23 February, 2016, New Delhi: Taking a positive step further to back-up the startup sector of the country, government has come up with the uniform norms for this sector. As per its new definition for startups, promising entrepreneurs whose turnover is less than 25 crore can entitle for tax breaks and other benefits for five years.

Elaborating on the subject, Department of Industrial Policy and Promotion (DIPP) said, “It would bring about ‘uniformity’ and ensure that only genuine startups get the benefits. Entities formed by splitting or re-construction of existing businesses will not be considered as startups. In order to obtain tax benefits a startup so identified under the above definition shall be required to obtain a certificate of an eligible business from the Inter-Ministerial Board of Certification.”

As per the officials, the board will comprise of Joint Secretary, DIPP, Representatives of Department of Science and Technology, and Department of Biotechnology. However, startups, in order to acquire tax benefits, need to follow a procedure. They need to submit an application form with documents including a letter of funding of not less than 20 per cent equity by any incubation fund/angel fund/private equity fund/ duly registered with SEBI that endorses innovative nature of the business.

DIPP’s notice stated, “To bring uniformity in the identified enterprises, an entity shall be considered as a ‘startup- Up’ to five years from the date of its registration; if its turnover for any of the financial years has not exceeded Rupees 25 crore. It is working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property.”

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