The Government of India has broadened the definition of a startup by saying that a business not older than seven years will qualify for benefits such as reduction in patent application fee and a tax holiday, under the startup India program. In the case of startups in the biotechnology sector, the period shall be up to 10 years, the Ministry of Commerce and Industry said in a notification. “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 $3.5 million.”
In order for a startup to avail of tax benefits it should be “working towards innovation, development or improvement of products or processes or services, or should be following a scalable business model with a high potential of employment generation or wealth creation.” Any entity formed by splitting up or by the reconstruction of a business already in existence will not be considered a startup, reports VCCircle.
“The changes are an effort to ensure ease of starting up new businesses to promote the startup ecosystem and build a nation of job creators instead of job seekers,” the government said.
The process of recognition as a startup will be through an online application made over the mobile app/portal set up by the Department of Industrial Policy and Promotion. Startups will no longer require a letter of recommendation from an incubator or an industry association for either recognition or tax benefits.
Last updated: December 26th, 2025
