The Department of Industrial Policy and Promotion (DIPP), which falls under the Ministry for Commerce and Industry, has vide a notification dated 11 April 2018 provided a new definition for ‘Startup’.
As per the definition provided, an entity shall be considered as a Startup:
- upto a period of seven years from the date of incorporation/registration, if it is incorporated as a private limited company (as defined in the Companies Act, 2013) or registered as a partnership firm (registered under section 59 of the Partnership Act, 1932) or a limited liability partnership (under the Limited Liability Partnership Act, 2008) in India.
In case of Startups in the biotechnology sector, this period shall be upto ten years from the date of its incorporation/ registration.
- If the turnover of the entity for any of the financial years since incorporation/ registration has not exceeded INR 25 crore.
- The 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.
Further, it is clarified that an entity formed by splitting up or reconstruction of an existing business shall not be considered a ‘Startup’.
The notification also provides for the following 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 Rupees 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 Rs. 25 crore.
Contributor
Contributor to present post is Ankush
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