BIRAC BIG Grant Utilisation Certificate & Milestone Disbursement Rules

The Biotechnology Ignition Grant (BIG) gives early-stage biotech and health-tech ventures up to ₹50 lakhs in grant-in-aid over 18 months, released in four milestone-linked tranches through a BIRAC-empanelled BIG Partner. Getting the money approved is the easy part. Keeping it flowing on schedule depends entirely on how cleanly the grantee runs its no-lien bank account, prepares its utilisation certificate in the prescribed GFR 12-A format, and answers the accounting and tax questions that come with treating a government grant as company income. Health-tech AI startups building diagnostics, medical devices or clinical decision-support tools are a growing share of BIG grantees, and most of them are running this compliance layer with a two-person finance team or none at all. This article sets out exactly what BIRAC’s rules require at each stage, and where founders most often lose time or money.

What is a utilisation certificate for a BIRAC BIG grant?

A utilisation certificate (UC) is a formal statement, filed in Form GFR 12-A under Rule 238(1) of the General Financial Rules 2017, in which the grantee certifies that grant money released for a specific period was spent only on the sanctioned project, in line with the approved budget heads, and that unspent balances are correctly carried forward or refunded. For BIG grantees, the BIG Partner requires a UC alongside every Quarterly Progress Report (QPR) before it recommends the next milestone tranche to BIRAC.

How does BIRAC release BIG grant funds across milestones?

BIRAC does not disburse the ₹50 lakh BIG grant as a lump sum. It is staged into four tranches tied to signing the agreement and completing two technical milestones, with the balance released as reimbursement after the final project report is accepted. This structure exists so BIRAC’s exposure at any point matches the work actually completed, not the work promised at proposal stage.

The indicative split, as set out in the BIG Scheme Guidelines (Version 8, July 2020), is as follows.

BIG grant milestone disbursement structure

Tranche	Trigger event	Indicative share	Nature of release
1st instalment	Signing of the Grant-in-aid Agreement (GLA) with the BIG Partner	Up to 30%	Advance, released into the no-lien account
2nd instalment	Completion of Milestone 1 (M1), verified by the BIG Partner	Approximately 30%	Milestone-linked
3rd instalment	Completion of Milestone 2 (M2), verified by the BIG Partner	Approximately 30%	Milestone-linked
4th instalment	Project completion and submission of the final report	Approximately 5 to 10%	Reimbursement, released only after acceptance of the final report

Two things follow directly from this structure. First, every tranche after the first is conditional on the previous milestone being both technically completed and financially accounted for, which means a delayed UC can hold up a technically completed milestone. Second, the last tranche is explicitly a reimbursement, so the grantee has to fund the final stretch of the project from its own resources before BIRAC releases the closing amount. A health-tech AI startup validating a diagnostic algorithm against a clinical dataset in month 16 needs to have budgeted for that gap, because the BIG grant will not cover it in real time.

The total timeline from call closure to agreement signing runs approximately 100 to 135 days. The project then runs 18 months. The final tranche is released after BIRAC accepts the completion report, which can add several weeks beyond the 18-month project clock. A founder who counts on receiving all ₹50 lakhs by the 18-month anniversary is likely to miscalculate cash flow for the final quarter.

What the GFR 12-A utilisation certificate must show for each tranche

The GFR 12-A format was designed for government grantee institutions generally, and BIG Partners adapt it for BIG grantees rather than inventing a separate template. Every UC a grantee files has to reconcile four figures for the reporting period: the opening balance in the no-lien account, the grant amount received from BIRAC through the BIG Partner, the amount actually spent against sanctioned budget heads, and the closing balance carried forward.

Beyond the numbers, GFR 12-A requires a set of signed certifications from the grantee. These typically confirm that:

• The accounts and subsidiary registers for the grant have been maintained separately and are available for audit
• Internal controls exist to safeguard the grant funds and to track physical progress against financial spend
• No transaction has been entered into in violation of the BIG Scheme Guidelines or the terms of the Grant-in-aid Agreement
• The expenditure was incurred only under the budget heads sanctioned at the due diligence stage (equipment, manpower, consumables, incubation costs, travel, outsourced services, IP costs and contingency)
• Where the reporting period closes at financial year end, the figures tally with the entity’s audited financial statements

For a company or LLP grantee (as opposed to an individual), this last point matters more than founders expect. If your BIG grant spans two financial years, the UC for the period ending 31 March has to agree with the audited books, not with an internal spreadsheet that has not yet gone through the statutory audit. Startups that treat the grant account as a side ledger, reconciled only when the BIG Partner asks for it, routinely find a mismatch between what they reported quarterly and what the auditor signs off on annually.

Which document actually closes out a milestone with the BIG Partner: the Quarterly Progress Report or the utilisation certificate?

Both. BIRAC’s monitoring process requires a Quarterly Progress Report (QPR) and a utilisation certificate for the same period, and the BIG Partner reviews them together before recommending fund release. A completed milestone with an incomplete or unaudited UC does not trigger disbursement on its own.

Who signs the UC and what happens when the signatory is unavailable?

The UC must be signed by the statutory auditor (a practising Chartered Accountant who is the company’s statutory auditor, not merely a CA on retainer) and countersigned by the authorised signatory of the grantee organisation. For a company, this is typically the Managing Director or the Director authorised by board resolution at the time of opening the no-lien account.

If that director’s Director Identification Number (DIN) is inactive or their Digital Signature Certificate (DSC) has expired, the countersignature step stalls entirely. Under the Companies (Appointment and Qualification of Directors) Amendment Rules 2025 (G.S.R. 943(E), effective 31 March 2026), DIR-3 KYC frequency moved from annual to triennial, which lowers filing frequency but raises the risk of prolonged undetected non-compliance. A DIN deactivation that went unnoticed for eight months can surface as a blocker three weeks before a milestone review. Checking DIN and DSC status before each milestone review window, not after the BIG Partner asks for the countersigned UC, is the practice that eliminates this delay.

Provisional vs audited UCs: how to handle a grant that straddles financial years

When the UC reporting period straddles 31 March, the grantee submits two documents:

For the period through 31 March (once the statutory audit is complete), a fully audited GFR 12-A UC signed by the Chartered Accountant and countersigned by the authorised signatory.

For the period after 31 March (where the audit is still pending), a provisional UC signed by the authorised signatory of the organisation alone, without CA certification. Most BIG Partners accept this provisional UC for tranche processing purposes, but the audited version must be filed before the next milestone review window opens.

The risk here is sequencing. A startup that closes its statutory audit in October for the year ended March, but has a M2 milestone review in August, will be presenting the M2 UC before the audited M1 period figures are settled. The BIG Partner can process on the provisional, but any material variance between the provisional and the audited figures will need to be explained in the M3 UC. Treating the two as separate exercises rather than a continuous reconciliation chain is where most year-end mismatches originate.

Why does BIRAC require a separate no-lien bank account?

Every BIG grantee, whether an individual, a company or an LLP, has to open a separate, auditable, no-lien bank account with a scheduled bank solely to receive and spend BIG grant funds. A no-lien account means the bank cannot set off any other liability of the grantee against the balance sitting in that account. This protects BIRAC’s grant-in-aid from being absorbed into the grantee’s general working capital exposure if the company runs into financial difficulty elsewhere.

In practice, this account has three operational consequences for a health-tech startup’s finance function.

• Every grant-funded transaction, from a lab consumables purchase to a contract researcher’s invoice, has to be routed through this account and tagged to the correct budget head, because the UC is built directly from this account’s ledger
• Interest earned on the balance in the no-lien account belongs to the project, not to the company’s general reserves, and BIG Partners typically require this interest to be reported in the UC and either adjusted against the next tranche or refunded at project closure
• Mixing grant funds with the company’s operating account, even temporarily to cover a payroll timing gap, breaks the audit trail that the UC depends on and is the single most common reason a BIG Partner flags a UC for clarification before recommending the next release

Founders running their first institutional grant often treat this account as a formality opened once and forgotten. BIRAC’s monitoring, and by extension the BIG Partner’s due diligence before each tranche, treats it as the primary evidentiary record for the entire engagement.

What does a BIG Partner check before releasing the next milestone tranche?

The BIG Partner, not BIRAC directly, is the body that verifies milestone completion and recommends fund release. Its due diligence at each tranche typically covers three layers: technical verification that the milestone deliverable was achieved, financial verification that spend matches the sanctioned budget, and compliance verification that the grantee’s structure and reporting obligations remain intact.

What a BIG Partner typically verifies before recommending a tranche

Verification layer	What is checked	Common evidence requested
Technical	Milestone deliverable matches the agreed project plan	Quarterly Progress Report (QPR), test data, prototype demonstration, clinical or validation results where applicable
Financial	Spend matches sanctioned budget heads within approved caps	No-lien account statement, GFR 12-A utilisation certificate, invoices and vouchers for major spend items
Compliance	Grantee structure and undertakings remain valid	Updated company or LLP registration status, confirmation that the Project Leader remains a shareholder, royalty and IP undertakings still in force

Budget head caps are a frequent source of friction here. Any reallocation across budget heads needs the BIG Partner’s prior concurrence, not a retrospective explanation in the UC.

What BIG funds can and cannot be spent on

The Version 8 guidelines (July 2020) fix the following allowable budget heads and caps. These apply unless BIRAC grants a specific written exemption before the expenditure is incurred.

BIG grant allowable budget heads and caps

Budget head	Cap	Notes
Equipment (non-recurrent)	Maximum 30% of project cost	Specific exemptions possible on case-by-case basis with prior BIRAC approval
Manpower/salary	Maximum 30%; sub-cap of ₹50,000 per month per head	Scientific advisors and mentors cannot draw salary from BIG funds
Outsourced services	Maximum 30% of project cost	Includes short-term consultancy and project-related services unavailable at the incubator
Travel (project-related)	Up to ₹1.5 lakhs	Project travel only
IP costs (patent drafting, filing)	Up to ₹1.5 lakhs	Foreground IP in-licensing charges are not covered
Contingency	Maximum 5% of project cost	Can cover company or LLP incorporation costs incurred during BIG tenure, stationery, conference registration, and incidental expenses
Incubation space rentals and services	Flexible, must be justified	Includes R&D premises rental and incubator service charges
Consumables	Flexible, must be justified	Reagents, lab consumables, components

One point founders consistently miss: the contingency head explicitly permits expenses towards setting up a company or LLP during BIG tenure. An individual grantee incorporating a startup mid-project can route those registration and professional fees through the contingency budget without seeking a separate exemption, provided the 5% cap is not breached.

What BIG does not fund: basic or exploratory research, infrastructure development, systematic clinical trials, late-stage field or field validation, or any academic PhD research.

Is the BIRAC BIG grant taxable income for your startup?

Yes, in most cases, but the split depends on which budget head the spend falls under. The governing provisions are Section 2(24)(xviii) of the Income Tax Act 1961 (corresponding to Section 2(49) of the Income-tax Act 2025, effective from FY 2026-27), read with Section 145B(3) and the Income Computation and Disclosure Standard VII (ICDS-VII) on Government Grants.

Revenue-head expenditure

Grant funds spent on manpower, consumables, incubation rentals, travel, outsourced services, and IP costs are revenue in nature. They are recognised as income of the company for the tax year in which they are utilised, matched against the corresponding expenditure. Under Section 145B(3), if the grant was not charged to income tax in an earlier year, it is deemed to be income of the year in which it is received. In practice, for BIG grantees, the income inclusion follows utilisation rather than receipt, consistent with ICDS-VII’s matching principle.

At typical BIG budget proportions (30% manpower, 30% outsourced services, and consumables), the taxable revenue portion across the 18-month project can be ₹30 lakhs or more. A startup that plans cash flow purely against the ₹50 lakh headline figure, without setting aside the resulting tax liability, faces a cash crunch at advance tax time that has nothing to do with the project itself.

Capital-head expenditure (equipment)

Grant funds used to acquire equipment that becomes a depreciable fixed asset on the company’s books fall under a specific carve-out. Under Explanation 10 to Section 43(1) of the Income Tax Act 1961 (Section 39(1)(d) and (3) of the Income-tax Act 2025), the grant amount is deducted from the actual cost of the asset for depreciation computation purposes rather than credited to the profit and loss account outright. The asset’s written-down value for depreciation therefore reflects only the company’s own contribution, not the full purchase price. Classifying this spend incorrectly as a revenue match at the time of purchase creates a depreciation schedule misstatement that the statutory auditor will need to correct.

Section 80-IAC interaction

Startups holding a valid DPIIT recognition and Inter-Ministerial Board (IMB) certificate may qualify for the three-year income tax holiday under Section 80-IAC of the Income Tax Act 1961. If the startup is within its eligible holiday period, the revenue-head grant income that would otherwise be taxable can fall within the profit eligible for the 80-IAC deduction. Founders should confirm their 80-IAC status and the remaining holiday period before computing advance tax instalments on BIG tranche receipts.

Does GST apply to a BIRAC BIG grant-in-aid receipt?

Generally no, but the answer depends on whether BIRAC’s grant carries a counter-obligation that looks like a service to BIRAC. Under Sections 7 and 2(31) of the Central Goods and Services Tax Act 2017, GST is levied on a “supply” made for “consideration.” A grant-in-aid that funds a startup’s own research and development, with no obligation to hand deliverables, data or intellectual property back to BIRAC as the grantor, is financial assistance rather than consideration for a supply, and generally falls outside the scope of GST.

The BIG Scheme’s structure supports this reading. BIRAC does not take assignment of the IP created under a BIG grant; the grantee retains ownership and instead pays BIRAC a 5% royalty on net sales once the product commercialises, capped at the amount of grant-in-aid disbursed. Because there is no transfer of goods, services or IP rights back to BIRAC as a condition of receiving the tranche, the grant itself does not constitute consideration for a taxable supply. This is consistent with the position CBIC has taken in Circular No. 245/02/2025-GST, which distinguishes grants that fund an institution’s own research (outside GST) from grants paid as consideration for a defined research service delivered to the grantor (inside GST).

Two situations still need case-specific review before a founder assumes the position is settled:

If a future BIG call or a specific grant agreement introduces a data-sharing, co-publication or technology transfer obligation back to BIRAC or the BIG Partner as a condition of the grant, that obligation could be read as a counter-performance, shifting the analysis toward a taxable supply. Startups that later add a co-development or data-licensing clause into an amended agreement, without revisiting the GST position, risk a mismatch between how the receipt was treated and what the agreement now actually says.

The royalty payment itself, once triggered by commercialisation, is a separate transaction from the grant receipt and should be evaluated independently for its own GST and withholding treatment at the time it becomes payable.

Because this turns on the specific wording of the grantee’s Grant-in-aid Agreement rather than a blanket rule, a startup should have its own signed agreement reviewed before filing a GST position, rather than relying on the general scheme guidelines alone.

What happens if a startup misses a milestone or cannot spend the full grant?

BIG grantees who fall behind schedule or find a milestone is no longer achievable have two structured options under the scheme rather than a single default outcome, and the choice affects both the UC and the royalty exposure differently.

A grantee can request a no-cost extension or a revision of milestones through the BIG Partner, supported by a revised project plan. BIRAC evaluates this on a case-by-case basis, and an approved extension does not by itself trigger a repayment obligation. The UC simply continues to cover the extended period.

Where the project is foreclosed or terminated under the terms of the Grant-in-aid Agreement, unutilised grant balance sitting in the no-lien account has to be refunded to BIRAC, and the royalty liability terminates rather than continuing to accrue. BIRAC’s scale-up grant GLA terms (which share a similar structure to the BIG GLA) provide that termination triggers repayment of the disbursed amount with simple interest at 12% per annum from the date of release, within 30 days of termination. BIG grantees should read their specific GLA carefully for the repayment mechanics applicable to their grant, since the BIG GLA is a separate document and may vary from the scale-up terms.

In both cases, the final UC for the terminated or extended period is the document that fixes exactly how much was spent, how much is unspent, and therefore how much (if anything) is refundable. A startup that has been sloppy with quarterly UCs through the project will find this closing reconciliation far more painful, since it now has to account for the entire grant history in one filing rather than four periodic ones.

The 5% royalty cap is also determined by the actual disbursed grant amount, net of any unutilised funds returned, not the sanctioned amount. A startup that receives ₹40 lakhs of a ₹50 lakh sanction and returns ₹10 lakhs has a royalty liability ceiling of ₹40 lakhs. Getting the final UC right therefore directly affects how much royalty the company is exposed to post-commercialisation.

Common mistakes that cost health-tech founders time and money

Treating the no-lien account as optional discipline. Founders route a vendor payment through the operating account “just this once” to avoid a banking delay, then cannot cleanly reconcile that spend against the grant ledger at UC time. The BIG Partner’s due diligence team flags this immediately, and clarification cycles routinely add four to six weeks to a tranche that should have released on schedule.

Reallocating budget heads without prior BIG Partner approval. The manpower, equipment, outsourced services and contingency caps in the BIG guidelines are not advisory. Spend that crosses a cap, or that shifts from one sanctioned head to another without documented approval, gets queried at UC review and can be disallowed, reducing the amount certified as legitimately utilised.

Filing the UC from an internal spreadsheet instead of audit-ready books. For a company or LLP grantee whose reporting period straddles a financial year end, the UC figures must tally with the audited financial statements, not a management estimate. Reconciling the two after the statutory audit is complete, rather than building the UC from audit-ready numbers in the first place, is where most last-minute delays originate.

Ignoring the tax treatment of the grant until year end. Because a large share of BIG spend falls under revenue heads (manpower, consumables, outsourced services), the corresponding grant amount is taxable income in the year it is utilised. Startups that plan cash flow purely against the ₹50 lakh headline figure, without setting aside the resulting tax liability, face a cash crunch at advance tax time that has nothing to do with the project itself.

Assuming the BIG grant has zero interaction with GST without checking the actual agreement. The general position that grant-in-aid falls outside GST holds only where there is no counter-obligation to BIRAC. Startups that later add a co-development or data-licensing clause into an amended agreement, without revisiting the GST position, risk a mismatch between how the receipt was treated and what the agreement now actually says.

Not disclosing the royalty liability in investor conversations. The 5% royalty on net sales, capped at the disbursed grant amount, is a contingent liability from the date of agreement signing. A due diligence team that finds it undisclosed in the cap table or financial statements treats it as a signal about the founder’s diligence habits, not just about the royalty itself. Disclosing it proactively, with the cap amount stated, defuses the issue entirely.

In the BIG engagements we have run at Treelife

In the BIRAC BIG engagements we have run at Treelife, the pattern that costs founders the most time is not technical failure, it is a finance function that was built for a seed-stage cap table and never adapted for grant-specific bookkeeping. A no-lien account needs its own chart of accounts mapped to the sanctioned budget heads from day one, not a generic ledger that gets reclassified retrospectively when the BIG Partner asks for a UC.

The fix is not complex. A separate expense register for the grant account, updated weekly, keyed to the approved budget heads and showing the running percentage against each cap, costs nothing and eliminates the reconstruction problem entirely. The board resolution for the account should also capture who is the authorised signatory, and that person’s DIN and DSC status should be checked before each milestone review, not after the BIG Partner asks for the countersigned UC.

We also see founders assume the 5% royalty under the Grant-in-aid Agreement is a distant, post-revenue concern, only to have an investor’s legal team flag it as an undisclosed contingent liability during Series A due diligence, because it was never carried on the balance sheet as a note. Under Rule 238(1) of the General Financial Rules 2017, the UC is meant to be a routine certification exercise, not a forensic reconstruction. The startups that treat it that way from tranche one are the ones whose fourth and final reimbursement lands without a due diligence query.

FAQs on BIRAC BIG grant utilisation certificate and milestone disbursement

Q: Is the entire ₹50 lakh BIG grant taxed in the year BIRAC disburses it?
A: No. Tax follows utilisation, not disbursement. Grant amounts spent on revenue heads such as manpower or consumables are recognised as income in the year the corresponding expenditure is incurred under Section 2(24)(xviii) of the Income Tax Act 1961 (Section 2(49) of the Income-tax Act 2025 for FY 2026-27 onwards), while amounts spent on depreciable equipment reduce that asset’s cost for depreciation instead of hitting the profit and loss account directly.

Q: Does BIRAC deduct TDS before releasing a milestone tranche?
A: No. The BIG grant is a grant-in-aid, not a payment for services rendered to BIRAC, so TDS provisions do not apply to the disbursement itself. TDS obligations arise separately on the grantee’s own side when the grantee pays contractors, consultants or vendors out of the grant funds.

Q: Can I use a provisional UC if my statutory audit is not yet complete?
A: Yes. For expenditure falling in the current financial year where the audit is pending, a provisional UC signed by the authorised signatory of the organisation is accepted by most BIG Partners for tranche processing. The audited GFR 12-A UC must be filed once the statutory audit is complete, before the next milestone review opens. Verify with your specific BIG Partner as practice varies.

Q: What is the GFR 12-A format and is it mandatory for BIRAC BIG grants?
A: Form GFR 12-A is the utilisation certificate format prescribed under Rule 238(1) of the General Financial Rules 2017. It is mandatory for BIRAC BIG grants. A UC not in this format is returned by the BIG Partner, delaying the tranche release. The form must be signed by the statutory auditor (Chartered Accountant) and countersigned by the authorised signatory of the grantee organisation.

Q: How does the BIG Partner decide whether a milestone is complete before releasing the next tranche?
A: The BIG Partner reviews the Quarterly Progress Report and the GFR 12-A UC for the same period together. The QPR covers technical achievements against the agreed milestone deliverables. The UC covers the corresponding financial utilisation, head-wise, against the sanctioned budget. Both documents must be consistent and complete before the BIG Partner recommends the tranche to BIRAC for release.

Q: How long does it typically take from UC submission to tranche credit in the bank?
A: Indicatively, 18 to 45 working days from submission of a compliant UC and QPR to fund credit in the no-lien account, depending on the BIG Partner and BIRAC’s processing queue. Incomplete UCs, missing vouchers, or a UC-QPR mismatch restart the clock.

Q: What does it typically cost to have a CA firm manage the BIG grant account and UC filings?
A: Most firms price this as part of a broader Virtual CFO or compliance retainer rather than a standalone per-UC fee, because the grant ledger, bookkeeping and UC preparation are continuous work across the 18-month project. Ask for a retainer scope that explicitly names quarterly UC preparation, no-lien account reconciliation and the annual audited UC as deliverables, rather than a general “compliance support” line item.

Q: Can BIG grant funds be used to pay a foreign consultant or vendor?
A: The scheme guidelines do not prohibit it outright, but any such payment needs prior BIG Partner concurrence as an outsourced services cost, and the grantee has to separately handle the withholding tax obligation under Section 195 of the Income Tax Act 1961 (Section 393(2), Table Sl. No. 17 of the Income-tax Act 2025 for FY 2026-27 onwards) and any applicable FEMA reporting for the outward remittance.

Q: Can co-founder or promoter salary be drawn from the BIG grant?
A: Only within the manpower budget head, capped at approximately 30% of project cost with a per-head ceiling of ₹50,000 per month, and only for team members formally part of the sanctioned project team. Scientific advisors and mentors named in the proposal cannot draw a salary through the BIG grant. No team member can receive salary or stipend from both BIG and another source simultaneously.

Q: What happens if I exceed the 30% equipment cap by mistake?
A: The excess expenditure will not be certifiable in the UC as utilised for the sanctioned purpose. The BIG Partner may classify it as disallowed, reducing the basis for the next tranche. The approved route is to seek a specific exemption from BIRAC before the expenditure is incurred. Retrospective waivers are possible but not guaranteed.

Q: Can the no-lien account earn interest, and what happens to that interest?
A: Yes, the account will earn bank interest. All interest earned must be reported in the GFR 12-A UC and treated as an adjustment against the grant rather than retained as company income. Unreported bank interest is a recurring audit finding in post-project reviews.

Q: What is the 5% royalty on net sales, and when does it kick in?
A: BIG grantees are required to pay BIRAC 5% royalty on net sales of the product or technology developed under the grant, beginning with the first sale. The obligation terminates when cumulative royalty paid equals the total grant-in-aid disbursed net of unutilised funds returned, or when the project is foreclosed. The royalty is a contingent liability that should be disclosed in financial statements and flagged in any investor data room.

Q: Does DPIIT startup recognition change how the BIG grant is taxed?
A: DPIIT recognition and the Section 80-IAC tax holiday operate independently of the BIG grant’s own tax treatment. A DPIIT-recognised startup still has to recognise the revenue-head portion of its BIG grant as income, though that income can fall within the profit eligible for the Section 80-IAC deduction if the startup otherwise qualifies for the holiday in that tax year and holds a valid IMB certificate.

Q: What happens to unspent grant money if the project is foreclosed early?
A: The unutilised balance in the no-lien account must be refunded to BIRAC as part of project closure, reconciled through the final utilisation certificate for the terminated period. The 5% royalty obligation on future net sales also terminates at foreclosure under the terms of the Grant-in-aid Agreement.

Q: Will an investor’s due diligence team ask about the BIG grant’s royalty liability during a funding round?
A: Yes, routinely. The 5% royalty on net sales, capped at the disbursed grant amount, is a contingent liability that directly affects post-revenue margin and will surface as a diligence finding if it was never disclosed. Disclosing it proactively in the data room, with the cap amount clearly stated, resolves it cleanly.

Q: Can an individual BIG grantee convert to a company mid-project without disrupting the grant?
A: Yes, this is an explicitly anticipated path under the BIG Scheme Guidelines. The new entity must meet all company or LLP eligibility criteria, the Project Leader must remain the same person and become a promoter shareholder, and the no-lien account and reporting obligations must transfer to the new entity with the BIG Partner’s sign-off. The incorporation costs for the new company can be routed through the contingency budget head provided the 5% cap is not breached.

Q: Are NRI founders eligible to apply for or continue on a BIG grant?
A: Only Indian citizens holding an Indian passport are eligible. NRIs qualify as Indian citizens for this purpose. OCI and PIO cardholders are explicitly excluded, which matters for health-tech founding teams with a mixed-citizenship cap table structuring their BIG application around a specific Project Leader.

Q: Is interest earned on the no-lien account taxable to the grantee company?
A: The interest is required to be disclosed and adjusted against the next tranche or refunded at closure for grant reporting purposes. It also constitutes interest income in the company’s own books for tax purposes and should be reflected in the company’s tax computation separately, since the two treatments serve different purposes.

Regulatory references:

• General Financial Rules 2017, Rule 238(1) and Form GFR 12-A (utilisation certificate format)
• BIRAC BIG Scheme Guidelines, Version 8, July 2020 (fund disbursement, budget caps, royalty, contingency)
• Income Tax Act 1961, Section 2(24)(xviii); Section 145B(3); Explanation 10 to Section 43(1); Section 80-IAC; Section 195
• Income-tax Act 2025, Section 2(49); Section 39(1)(d) and (3); Section 393(2) Table Sl. No. 17 (applicable from FY 2026-27)
• Income Computation and Disclosure Standard VII (ICDS-VII) on Government Grants