Companies with Turnover Up to Rs 200 Crore Now Qualify as Startups, Government Changes Rules

The government has made significant changes to the rules for recognizing startups. Now, companies with a turnover of up to Rs 200 crore will be considered startups. Previously, this limit was Rs 100 crore. In addition, a new category has been created for ‘Deep Tech Startups’. This is for companies that work on cutting-edge and research-based technologies.

This step has been taken to give a new direction to India’s startup ecosystem. Nowadays, startups take more time in research and development. They also require more funding, and it takes longer for them to start generating revenue. This is especially true in deep tech, manufacturing, and research-based sectors. So far, nearly two lakh companies have been recognized as startups. Recognized startups receive several benefits under the ‘Startup India’ initiative, such as income tax exemptions.

DPIIT Issues Notification

According to a notification from the Department for Promotion of Industry and Internal Trade (DPIIT), the turnover limit for identifying startups has been increased from Rs 100 crore to Rs 200 crore. New rules have also been framed for deep tech startups. For deep tech startups, the government has significantly increased the age and turnover limits.

What are the changes in the rules?

• A company will now be considered a deep tech startup for up to 20 years from its incorporation or registration, instead of 10 years.
• The turnover limit has been increased to Rs 300 crore.
• The DPIIT stated that this step will address the specific needs of deep tech companies that work on long-term projects.
• These companies incur significant expenses on research and development and require substantial funding to develop their technology.

Cooperative Societies Also Granted Startup Status

• Another major change is that some cooperative societies will now also be recognized as startups. This will promote innovation at the grassroots level. This includes the following cooperative societies:
• Multi-State Cooperative Societies registered under the Multi-State Cooperative Societies Act, 2002.
• Cooperative Societies registered under the Cooperative Acts of States and Union Territories.
• The aim of this initiative is to promote new ideas in agriculture, allied activities, rural industries, and community-based businesses.