The Government of India has issued a revised notification redefining the term “Startup” and introducing the category of “Deep Tech Startup”, bringing cooperative societies formally within the Startup recognition framework.
The notification, issued by the Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce and Industry, replaces the earlier Startup notification dated February 19, 2019.
According to the notification, an entity will be recognised as a Startup if it is registered in India as a private limited company, partnership firm, limited liability partnership, Multi-State Cooperative Society, or a cooperative society registered under the relevant State or Union Territory Cooperative Societies Act.
To qualify as a Startup, the entity must be within ten years of its incorporation or registration and must have a turnover not exceeding Rs 200 crore in any financial year since registration. The entity should be engaged in innovation, development or improvement of products, processes or services, or operate a scalable business model with potential for employment generation or wealth creation. Entities formed by splitting or reconstruction of an existing business are not eligible.
The notification also introduces a ‘Deep Tech Startup’ category. In such cases, the period of eligibility is extended to twenty years, and the turnover limit is raised to Rs 300 crore. A Deep Tech Startup must be working on solutions based on scientific or engineering advancements, have relatively higher expenditure on research and development, be creating or owning intellectual property, and face longer development timelines and technical uncertainty.
The notification lays down the process for Startup recognition, requiring eligible entities to apply through the DPIIT portal along with their registration certificate and a description of their business activities. Applications for Deep Tech Startup recognition must include additional documents as specified.
It also sets out conditions for use of funds during the recognition period and restricts certain types of investments. Provisions have been included for revocation of recognition in cases where approval is obtained using false information.
The notification further outlines the procedure for obtaining certification for tax benefits under Section 80-IAC of the Income-tax Act, applicable to eligible private limited companies and limited liability partnerships.
The revised Startup framework will come into effect from the date of its publication in the Official Gazette.
