Change the Definition of Start-up in Budget 2022; Industry to Government

Private Equity and Venture Capital Association (IVCA), an industry body has proposed a new definition regarding startups in a note to the government for considering it in upcoming Union Budget.

As reported by ET, IVCA has proposed that a company should be considered a startup as long as it is under 10 years old and not a subsidiary or outcome of a merger or spin-off, irrespective of its revenue.

“Currently, the amended provisions by the Department for Promotion of Industry and Internal Trade (DPIIT) say a company will be recognised as a startup till 10 years from its date of incorporation, with a revenue threshold of Rs 100 crore,” a person aware of the matter said. “They (IVCA) have proposed that revenue should not be a benchmark at all.” Earlier, the revenue threshold was Rs 25 crore.

Further, an older demand has also been proposed that the direct listing of Indian startups overseas should be allowed. People aware of the government officials’ thinking on the issue said the government has discussed if a local startup is allowed to list overseas, it should come back after a certain number of years and list its business here. “Nothing is final on this front yet. But there is a push on this as well,” a person aware of the matter said.

However, with respect to tax, it has been proposed that any startup backed by an Alternative Investment Fund (AIF) or a foreign venture capital fund should be considered a startup and shall get relevant tax sops.

The note has been sent to various stakeholders in the government including officials in the finance ministry, sources added.



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