The Government of India has defined a "startup" under the ‘Startup India’ initiative as-
a) Up to five years from the date of its incorporation/registration,
b) If its turnover for any of the financial years has not exceeded Rupees 25 crore, and
c) It is working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property.
Any entity formed by splitting up or reconstruction of a business already in existence shall not be considered a ‘startup’.
ELIGIBILITY CERTIFICATE
In order to obtain tax benefits a "startup" shall be required to obtain a certificate of an eligible business from the Inter-Ministerial Board of Certification consisting of:
a) Joint Secretary, Department of Industrial Policy and Promotion,
b) Representative of Department of Science and Technology, and
c) Representative of Department of Biotechnology.
NEW PRODUCT/SERVICE
An entity is considered to be working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property if it aims to develop and commercialize:
a. A new product or service or process, or
b. A significantly improved existing product or service or process, that will create or add value for customers or workflow.
Following would not be covered under this definition:
a. products or services or processes which do not have the potential for commercialization or
b. undifferentiated products or services or processes, or
c. products or services or processes with no or limited incremental value for customers or workflow.
APPLICATION
The process of recognition as a ‘startup’ shall be through a mobile app/portal of the Department of Industrial Policy and Promotion. Startups will be required to submit a simple application with any of the following documents:
a) a recommendation (with regard to innovative nature of business), in a format specified by Department of Industrial Policy and Promotion, from any Incubator established in a postgraduate college in India; or
b) a letter of support by any incubator which is funded (in relation to the project) from the Government of India or any State Government as part of any specified scheme to promote innovation; or
c) a recommendation (with regard to innovative nature of business), in a format specified by Department of Industrial Policy and Promotion, from any Incubator recognized by Government of India; or
d) a letter of funding of not less than 20 per cent in equity by any Incubation Fund/Angel Fund/Private Equity Fund/Accelerator/Angel Network duly registered with Securities and Exchange Board of India that endorses innovative 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; or
e) a letter of funding by the Government of India or any State Government as part of any specified scheme to promote innovation; or
f) a patent filed and published in the Journal by the Indian Patent Office in areas affiliated with the nature of the business being promoted.