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What is a Start Up

Published: 19 Jan 2018

There is a lot of buzz in the Indian air. Startup is the word everyone swears by. The government, Banks, Investors, Reserve Bank of India, the buzz just does not stop …

I have had the privilege of helping some startups and I see them as a beacon for the future of India.

In next few articles, I will post information that the young entrepreneurs may find useful in knowing whether they qualify as startups and what benefits can they avail of under the promotional schemes announced by the governments. For more information or advice, you can always reach me directly.

First things first. What is a startup ?

A startup or start-up is typically an entrepreneurial venture which is a newly emerged, fast-growing business that aims to meet a marketplace need by developing or offering an innovative product, process or service.

By this yardstick, every new venture is a startup. Right?

However, for the purpose of government schemes, a Startup means an entity which is incorporated or registered in India:

·        Not prior to five years,

·        With annual turnover not exceeding INR 25 crore (250 million) in any preceding financial year, and

·        Working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property

Provided that such entity is not formed by splitting up, or reconstruction, of a business already in existence. Provided also 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 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.

Discussion about the eligible entities, formation, processes, funding possibilities, etc. in forthcoming articles.


About the author :

Bhumesh Verma is a Corporate Lawyer with over 2 decades of experience in advising domestic and international clients, with a place in "The A-List - India's Top 100 Lawyers" by India Business Law Journal. He keeps writing frequently on FDI, M&A and other corporate matters. He can be reached at bhumesh.verma@corpcommlegal.com.

Firm: Addleshaw Goddard

Practice Area: Trade & Customs

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