Industry body Indian Private Equity and Venture Capital Association (IVCA) proposed a new definition for startups while also reiterating some older demands such as allowing local firms to directly list overseas , in a note to the government ahead of the Union budget.
According to multiple sources familiar with the situation, IVCA has proposed that a company be considered a startup if it is less than ten years old and is not a subsidiary or the result of a merger or spin-off, regardless of 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.”
Another person who is part of the industry grouping said, “The present definition of Indian startups is still something that the overall industry thinks can be made sharper for younger companies to benefit from.” Doing “innovating” work, too, would be an important criterion, as per IVCA’s note.
According to sources, the note was distributed to various government stakeholders, including officials from the finance ministry.
From a tax standpoint, it has been proposed that any startup backed by an Alternative Investment Fund (AIF) or a foreign venture capital fund be considered a startup and be eligible for relevant tax breaks.
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