The Recognition Procedure, and What It Gives

The procedure

Paragraph 2 of G.S.R. 127(E):

The process of recognition of an eligible entity as startup shall be as under:-

(i) A Startup shall make an online application over the mobile app or portal set up by the DPIIT.

(ii) The application shall be accompanied by-

(a) a copy of Certificate of Incorporation or Registration, as the case may be, and

(b) a write-up about the nature of business highlighting how it is working towards innovation, development or improvement of products or processes or services, or its scalability in terms of employment generation or wealth creation.

(iii) The DPIIT may, after calling for such documents or information and making such enquires, as it may deem fit,-

(a) recognise the eligible entity as Startup; or

(b) reject the application by providing reasons.

The whole procedure is three sub-paragraphs, and an answer can quote them.

One application, online, on the Start-up India portal or app.

Two attachments only. The certificate of incorporation or registration, and a write-up on how the entity meets the innovation or scalability test. The write-up is the substance of the application, and a rejection is almost always a rejection of the write-up.

A reasoned decision. DPIIT may call for documents and make enquiries, and must give reasons if it rejects.

The steps in practice

1. Register on the Start-up India portal with the entity's details.
2. Open the recognition application and enter the entity's name, the date and number of incorporation or registration, the PAN, the address, and the details of the directors, designated partners or partners.
3. Attach the certificate of incorporation or of registration.
4. Write the write-up. What the product, process or service is, what is new about it, the problem it solves, and how the model scales in employment or wealth creation. Where the entity holds a patent or a trade mark, or has revenue or awards, they are given here.
5. Self-certify the conditions in paragraph 1(a): the ten years, the Rs. 100 crore, and that the entity was not formed by splitting up or reconstructing an existing business.
6. Submit. There is no fee.
7. DPIIT examines, may call for more, and either recognises or rejects with reasons.
8. The recognition certificate is issued with a DPIIT recognition number, and is downloaded from the portal.

Recognition is not the same as the tax certificate. Recognition is paragraph 2; the tax holiday certificate is paragraph 3 and is decided by a different body.

What recognition gives

An answer that lists steps and stops has left out the reason anybody applies.

Regulatory and procedural benefits.

• Self-certification of compliance under specified labour and environment laws for a period, with no inspection except on a credible complaint.
• Faster and cheaper intellectual property: a rebate on patent and trade mark fees, and a facilitator whose cost the Government bears.
• Relaxed public procurement norms, with exemption from prior turnover and experience requirements, and from earnest money deposit.
• Easier winding up, through the insolvency law's fast track process.
• Access to the Fund of Funds for start-ups, and to the credit guarantee scheme, both operated through intermediaries.