TMI BlogRecognition of an eligible entity as startup - revised policyX X X X Extracts X X X X X X X X Extracts X X X X ..... not exceeded ₹ 25 crore iii. Entity is working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation. Provided that an entity formed by splitting up or reconstruction of an existing business shall not be considered a Startup . Explanation - An entity shall cease to be a Startup on completion of seven years from the date of its incorporation/ registration or if its turnover for any previous year exceeds ₹ 25 crore. In respect of Startups in the biotechnology sector, an entity shall cease to be a Startup on completion of ten years from the date of its incorporation/ registration or if its turnover for any previous year exceeds ₹ 25 crore. (b) Act means the Income-tax Act,1961; (c) Board means the Inter-Ministerial Board of Certification comprising of the following members: - (i) Additional Secretary, Department of Industrial Policy and Promotion, Convener (ii) Representative of Ministry of Corporate Affairs, Member (iii) Representative of Ministry of Electronics and Information Technology, Member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuments or information and making such enquires, as it may deem fit, - (i) grant the certificate referred to in sub-clause (c) of clause (ii) of the Explanation below sub-section (4) of section 80-IAC of the Act; or (ii) reject the application by providing reasons 2 [Approval for the purposes of clause (viib) of sub-section (2) of section 56 of the Act . 4. (1) A Startup which is recognised by DIPP under para 2(iii) (a) shall be eligible to apply for approval for the purposes of clause (viib) of sub-section (2) to section 56 of the Act for the shares already issued or proposed to be issued if the following conditions are fulfilled- (i) aggregate amount of paid up share capital and share premium of the startup after the proposed issue of share, if any, does not exceed ten crore rupees; (ii) The investor/ proposed investor shall have - (a) returned income of ₹ 50 lakh or more for the financial year preceding the year of investment/proposed investment; and (b) net worth exceeding ₹ 2 crore or the amount of investment made/proposed to be made in the startup, whichever is higher, as on the last date of the financial year preceding the year o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able)- 1. Annual Accounts of the startup for the last three financial years 2. Copies of income-tax returns for the last three financial years 5 [Form-2 Application for approval for the purposes of section 56(2)(viib) of the Income-tax Act, 1961 1. Name of the Startup- ....................................... 2. Date of incorporation of Startup as company 3. Incorporation No-....................................... 4. Address and business location-....................................... 5. Nature of business- ....................................... 6. Contact details of Startup (Phone No. and Email)-....................................... 7. Permanent Account No-....................................... 8. Startup Recognition number allotted by DIPP- ....................................... 9. Existing/proposed activities-....................................... 10. Details of share capital as on the date of application- (i) Amount of share capital......... (ii) Issue price and date of issue of shares......... (iii) Type of shares............ (iv) Number of shares......... (v) Face value............ (vi) Amount of share pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be eligible to apply for approval for the purposes of clause (viib) of sub-section (2) of section 56 of the Act, if the following conditions are fulfilled: - (i) the aggregate amount of paid up share capital and share premium of the startup after the proposed issue of shares does not exceed ten crore rupees, (ii) the investor/ proposed investor, who proposed to subscribe to the issue of shares of the startup (hereinafter in this notification referred to as investor ) has, - (a) the average returned income of twenty five lakh rupees or more for the preceding three financial years; or (b) the net worth of two crore rupees or more as on the last date of the preceding financial year, and (iii) the startup has obtained a report from a merchant banker specifying the fair market value of shares in accordance with Rule 11UA of the Income-tax Rules, 1962. (2) the application for approval under this para shall be made in Form-2 to the Board and shall be accompanied by the documents specified therein. (3) The Board may, after calling for such documents or information and making such enquiries, as it may deem fit, - (i) grant approval for the purposes of clause ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Memorandum of Association, LLP/Partnership Deed, Board Resolution etc., if applicable) (vi) Residential status (vii) Amount of investment proposed .. (viii) Average Returned income of the investor in the last three financial years- (ix) Net-worth of the investor on the last date of the preceding financial year- 14. Fair market value of shares as per the report of a merchant banker.......................... Declaration I/We hereby certify that the above information furnished by me is true and no relevant information has been concealed. For (Name of the Startup) (Name of the authorised signatory) Designation Place: _______ Date: _______ This form shall be accompanied by the following documents - a. the annual accounts of the startup from the date of its incorporation; b. name, PAN and address of the existing shareholders along with their shareholding and the amount at which shares are issued to them; c. copy of income-tax returns of the investor for the last three financial years; d. copy of balance sheet of the investor as on the last day of the preceding financial year; and e. merchant banker s re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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