The Department for Promotion of Industry and Internal Trade (DPIIT) released a gazette notification in February.
The definition of startup is broader compared to the earlier definition under ‘Startup India, Standup India’ scheme.
According to the new definition, an entity will be considered a startup:
- Upto 10 years from the date of incorporation.
- If an entity’s turnover hasn’t exceeded INR 100 crore in any financial year from the date of incorporation.
In comparison to the definition of startups given earlier in DPIIT’s April 2018 gazette notification, An entity was considered a startup upto a period of 7 years from the year of incorporation and it’s annual turnover was not to exceed INR 25 crore in any of the financial years from the year of incorporation.
Both the old and the new definitions require the entities to work on a business model with a high potential of innovation, development, employment and wealth generation.
Minister of commerce and industry, civil aviation, Suresh Prabhu said they will simplify the process for startups to get an exemption on investments under Sec 52 (2) (viib) of Income Tax Act, 1961. This provision under this section is called angel tax.