DPIIT Recognition: Who Is Eligible

The notification

G.S.R. 127(E), dated 19 February 2019, issued by the Ministry of Commerce and Industry, Department for Promotion of Industry and Internal Trade, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i).

Its own first line records what it replaced:

This notification is being issued in supersession of the Gazette Notification No. G.S.R. 364(E) dated April 11, 2018 as modified vide Gazette Notification No. G.S.R. 34 (E) dated January 16, 2019.

Two earlier notifications superseded. MU names this one in her syllabus, and it is the one in force.

The definition of a start-up

Paragraph 1(a):

An entity shall be considered as a Startup:

i. Upto a period of ten 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 section 59 of the Partnership Act, 1932) or a limited liability partnership (under the Limited Liability Partnership Act, 2008) in India.

ii. Turnover of the entity for any of the financial years since incorporation/ registration has not exceeded one hundred crore rupees.

iii. Entity is 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.

Provided that an entity formed by splitting up or reconstruction of an existing business shall not be considered a 'Startup'.

Three conditions and a proviso, and all three conditions must be satisfied.

Condition (i): age and form

Ten years from the date of incorporation or registration.

And one of exactly three forms, each with its own statutory reference in the notification:

Note what is not on the list. A proprietorship cannot be a recognised start-up. Nor can a public company, a society, a trust or a co-operative.

And note the words in the middle row. A partnership firm qualifies only if it is registered under section 59, which is the Registrar's entry in the Register of Firms. An unregistered firm is not eligible, and this is the practical answer to a student who asks why a firm intending to be a start-up must register when the Partnership Act does not require it.

In India, so an entity incorporated abroad does not qualify.

Condition (ii): turnover

Not exceeding Rs. 100 crore in any of the financial years since incorporation or registration.

Read it carefully: "any of the financial years". It is not the current year. A single year above Rs. 100 crore disqualifies the entity for good, and the Explanation confirms it.