DPIIT Notifies Revised Startup Framework, Introduces Deep Tech Category

The Department for Promotion of Industry and Internal Trade (DPIIT) has notified a revised framework governing the definition and recognition of startups in India, formally introducing a separate sub-category for deep tech startups and revising eligibility thresholds. The updated framework broadens the scope of entities eligible for recognition, revises turnover limits, and lays down distinct parameters for deep tech startups, while largely retaining the existing recognition process.

The revised framework is summarised below:

• Criteria for startup recognition:
  • Company type: The startup must be incorporated or registered in India as a private limited company, or registered as a partnership firm, a limited liability partnership, a multi-state cooperative society or a cooperative society.
  • Company age: An entity will be considered a startup up to 10 years from the date of its incorporation or registration.
  • Annual turnover: Its turnover for any of the financial years since incorporation or registration should not exceed ₹200 crore.
  • Innovative and scalable: The entity should be working towards innovation, development or improvement of products, processes, or services, or have a scalable business model with high potential for employment generation or wealth creation.
  • Original entity: An entity formed by splitting up or reconstruction of an existing business will not be considered a startup.

• New sub-category of deep tech startups:
  • Core attributes: The framework identifies certain core attributes of deep tech startups, including high research and development intensity, extended development timelines, and long gestation periods. Whether an entity qualifies as a deep tech startup will be determined in accordance with the framework, parameters, and guidelines issued by DPIIT, and based on documents and information furnished by the applicant.
  • Recognition period and turnover limit: For deep tech startups, the recognition period has been extended from 10 years to 20 years from the date of incorporation or registration, and the turnover limit enhanced to ₹300 crore.

• Recognition process: The requirement to submit an application accompanied by a certificate of incorporation or registration and a write-up describing the nature of business continues. In addition, entities seeking recognition as deep tech startups are required to furnish specified documents and information as prescribed under the revised framework.

• Certificate for tax benefits: A startup, including a deep tech startup, being a private limited company or limited liability partnership, and which fulfils the prescribed conditions, may apply for a certificate for tax exemption under Section 80-IAC of the Income-tax Act, 1961. Notably, the turnover limit under this provision, as well as the corresponding provision under the Income-tax Act, 2025, continues to remain ₹100 crore.

• Investment restrictions: Under the revised framework, startups, including deep tech startups, are required to deploy funds primarily towards core business activities, innovation, research, scaling, or operational requirements. They are restricted from engaging in specified activities or investments, such as loans and advances or investments in luxury assets, except where undertaken in the ordinary course of business.

Key takeaways:

• Eligibility for startup recognition has been extended to cooperative entities.
• The turnover threshold for startup recognition has been increased from ₹100 crore to ₹200 crore.
• A distinct sub-category for deep tech startups has been introduced, with an extended recognition period and higher turnover limit.
• Following the abolition of angel tax with effect from April 1, 2025, the revised framework omits references to related exemptions.