Start-ups from now onward have a uniform definition. The government has stated that those startups under which a budding entrepreneur has a turnover of less than Rs 25 crore can avail tax breaks and other benefits for a five-year period, as reported by The Press Trust of India.
The Department of Industrial Policy and Promotion (DIPP) notified the definition and said that this will bring about uniformity and also make certain that only genuine startups get the benefits. Another clause added to this definition is that those organisations formed after the slitting of businesses will not be considered as start-ups.
“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,” DIPP said in a notification.
The Board that will check the same would consist of Joint Secretary, DIPP, Representatives of Department of Science and Technology, and Department of Biotechnology. The process of verifying whether a business is a start-up or not, will be done through the mobile app or online portal of the DIPP.
The notification by the DIPP also mentioned that start-ups will need to submit a simple application form and certain documents. This includes a letter of funding of not less than 20 per cent in equity by any incubation fund/angel fund/private equity fund/ duly registered with SEBI that endorses innovative nature of the business.
The government feels that it is important to give tax benefits to encourage start-ups.
