In common business language, startup means a business with the innovation of any kind. But for availing any benefit of the Indian or any state government or any startup India schemes, an entity has to comply with the conditions laid down in the latest startup notification issued by DPIIT, Ministry of Commerce and Industry which is as under:-

• The entity should be either a private company, a LLP, or a registered partnership firm.
• The entity should not have been formed by splitting up or reconstructing an existing business.
• The entity is not older than 10 years from its formation.
• Turnover of the entity in any year should not have exceeded Rs. 100 crores.
• The entity is working towards innovation, development, or improvement of products or processes, or services or the entity has a scalable business model with high potential for employment generation or wealth creation. 
  

In addition to the conditions mentioned in the startup notification and guidelines of DPIIT, Ministry of Commerce and Industry, the startup to avail tax exemption under Income Tax law should fulfill conditions mentioned in Section 80IAC of the Income Tax Act, 1961 which are as under:-

• The entity should be either a Private Company or an LLP.
• The entity should be formed between April 2016  and March 2023. 
  
• The entity should have a certificate from the Inter-Ministerial Board constituted to certify if an entity is eligible to avail of this tax exemption.
• The exemption can be claimed maximum only for three consecutive financial years
• The entity should not be formed by transfer of previously used plant & machinery. Only up to used 20% of the total plant and machinery can be previously used. Plants & machinery previously used outside India being imported in India which was never used before in India and on which no deprecation has been claimed by any person in India will be treated as new plant & machinery for this purpose.
• The entity should get its books of accounts audited by a chartered accountant who will furnish his report in Form 10CCB and submit the audit report to the Income tax department.  
  

The following documents are required for obtaining Startup India recognition:-

• PAN of the Entity.
• LLP Deed or Partnerhsip Firm Deed or MOA & AOA of the Company.
• Incorporation Certificate of LLP or Company or Registration Certificate of partnership.
• Website or Pitch deck or explainer video (if any).
• Award, Certificate, or Recognition (if any).
• Filed Trademark, Copyright, or Patent (if any).
  

YES, any existing business can be registered as a startup on the Startup India portal if the said business qualifies all the criteria mentioned in the DPIIT notification and guidelines (refer to FAQ 1)

As per DPIIT, Ministry of Commerce & Industry notification only Private limited companies, LLPs and registered partnership firms are eligible for startup recognition. The following can be kept in mind before finalizing the entity structure for your startup:-

•  Private Limited companies and LLP are entities having seprate legal existence from their owner, i.e., Shareholders in the case of a company and partners in the case if an LLP. But in the Case of partnership Firms, there is no seprate legal existence.
• Private limited companies and LLP have limited liability and thus personal assets of the owners remain safe but it is not the same for partnership firms whose liability is unlimited
  
• In Private Limited Companies, there can be sepration of ownership and management of a company, as management (Directors) may be different from the shareholders, which is quite not possible for LLPs and Partnership firms. For this reason, banks, financial Institutions, and investors (VC's and angel investors) prefer companies for investing or giving loans. However these days investors equally consider backing many LLPs also.
• The Private Limited company structure has stricter compliance, mandatory statutory audits, and consequently increased compliance costs compared to LLPs. Similarly, LLPs have stricter Compliance, mandatory filings of accounts & annual returns, and consequently increased compliance costs compared to Partnership firms.
• However, if availing of the 3-year tax break or taking exemption from tax on premium to be received on shares upon valuation is the main criteria the one should go for a Private limited company or LLP, without considering any comparison as a partnership firm even if registered as a startup is not eligible for the tax break or exemption benefits.
  

NO,  the eligibility criteria in the DPIIT Notification provides that in case the entity is being formed up by way of splitting-up or reconstruction of any existing business, then the new entity is not applicable for startup recognition.

YES, OPC (One Person Company) is classified as a private company under the law and thus will be eligible for startup registration if it meets the rest of the other eligibility criteria.

YES, a sole-proprietorship or a single firm can be converted into a Private Company or LLP or a registered partnership and apply for startup registration. However, the 10-year period for being eligible to be recognized as a startup will be counted from the date of commencement of business of the sole proprietorship.

YES, the converted entity will be eligible for startup recognition if it complies with all the conditions mentioned in the DPIIT notification and guidelines and it also complies with the condition that out of the total plant & machinery in the converted entity, subject to some exceptions not more than 20% is second-hand as laid out in Section 80IA(3) of the Income Tax Act.

However, the 10-year period for being eligible to be recognized as a startup will be counted from the date of formation of the original entity and not the converted entity.

YES, the converted entity will be eligible for startup recognition if it complies with all the conditions mentioned in DPIIT notification and guidelines and it also complies with the condition that out of the total Plant & Machinery in the converted equity, subject to some exceptions not more than 20% is second-hand as laid out in Section 80IA(3) of the Income Tax Act.

However, the 10-year period for being eligible to be recognized as a startup will be counted from the date of formation of the original entity and not the converted entity.

YES, an Indian entity satisfying all conditions mentioned in the DPIIT notification and guidelines can be registered as a startup. However, the minimum shareholding of Indian promoters is required to be at least 51%.

NO, Foreign companies cannot be recognized as startups. However, if the foreign company has a presence in India, it can create its profile on the Startup Indian portal and connect with startup ecosystem stakeholders on the Startup hub.

Any business having one of their registered offices in India is welcome to register on the Startup India portal as location preferences for the time being are only created for states of India. However, Startup India Portal and DPIIT are working on international relations. They will soon be able to enable registration for stakeholders from all around the globe.

NO, as per the guidelines for recognition of startups issued by the DPIIT, Ministry of Commerce and Industry, even if a company fulfills all the criteria mentioned in the startup recognition notification will not be registered as a startup if such company is a holding, subsidiary or joint-venture company.

YES, a Private Company formed by Merger or Amalgamation can be recognized as a Startup if the merger is a fast-track merger under the companies act, 2013 and if:-

• The merger is between 2 or more Startups companies; or
  
• The merger is between 1 or more startup company with 1 or more small company.
  

NO, a Private Company formed by Demerger cannot be recognized as a Startup as per the guidelines issued by DPIIT, Ministry of Commerce and Industry.

NO, change of name of the startup will not make its startup recognition suspended. However, the 10-year period for being eligible to be recognized as a startup will be counted from the date of formation of the startup and not from the change of the name.

NO, change of business activity of a startup does not affect its eligibility to be recognized as a startup. However, the 10-year period for being eligible to be recognized as a startup will be counted from the date of formation of the startup and not from the change of the business objectives or activities.

If there are 2 entities in the same line of business with similar addresses, and at least 1 common Director / Designated Partner or Partner, then the entity which was formed earlier is only eligible for startup recognition and the 2^nd entity will not eligible for startup recognition.

The validity of the startup recognition is till competition of 10 years from the date of formation of the startup. Further, no yearly declaration is required to be filed on the startup India portal and no concept of renewal is there.

YES, if a Startup post its recognition fails to fulfill all the conditions mentioned in the DPIIT notification and guidelines (refer to FAQ 1), then it can be de-recognized by the department by way of revocation of the startup certificate.

No, the entire process of Startup registration and DPIIT recognition is online and there is no such requirement to be physically available at any place for that.

There is no such time limit within how much time an existing entity should file for startup recognition. However, one should get this done as soon as possible to start availing of the benefits, and also the 10-year eligibility period of being recognized as a startup is counted from the formation of the entity and not from the date of obtaining startup recognition.

Startup India Registration can be applied at the Startup India portal through http://www.startupindia.gov.in

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