Department of Industrial Policy and Promotion (DIPP), under the Union Ministry for Commerce and Industry, has come out with a new notification on definition of start-ups.
According to the notification, an entity shall be considered as a start-up up to 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 Sction 59 of the Partnership Act, 1932) or a limited liability partnership (under the Limited Liability Partnership Act, 2008) in India.
In the case of start-ups in the biotechnology sector, the period shall be up to ten years from the date of its incorporation/ registration, it added.
The notification also said that the turnover of the entity for any of the financial years since incorporation/ registration should not exceed ?25 crore.
The definition also said that the entity should be 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. However, an entity formed by splitting up or reconstruction of an existing business shall not be considered a ‘start-up’.
“An entity shall cease to be a start-up 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 start-ups in the biotechnology sector, an entity shall cease to be a start-up on completion of ten years from the date of its incorporation/ registration or if its turnover for any previous year exceeds ? 25 crore ,” it added.