βIndirect Tax I Indirect Tax Litigation I Customs & FTP I Central Licensing I Arbitration I Advisoryβ
Dated: 07.02.2026
Government of India Notifies New Startup Definition 2026: Deep Tech Startups Get 20-Year Recognition & Higher Turnover Limit β
The Ministry of Commerce and Industry, through the Department for Promotion of Industry and Internal Trade (DPIIT), issued a significant notification on February 4, 2026, aimed at redefining and streamlining the recognition and certification process for startups in India. This notification supersedes the earlier Gazette Notification No. β G.S.R. 127(E) dated February 19, 2019, and introduces updated definitions, processes, and conditions for startups and deep tech startups. Hereβs a detailed breakdown of the notification and its implications.
Key Definitions
The notification provides a comprehensive definition of a βStartupβ and introduces the concept of a βDeep Tech Startup.β β
What is a Startup? β
An entity qualifies as a startup if it meets the following criteria:
- Incorporation or Registration: The entity must be registered in India as one of the following:
- Private limited company (under the Companies Act, 2013) β
- Partnership firm (under the Partnership Act, 1932) β
- Limited liability partnership (under the Limited Liability Partnership Act, 2008) β
- Multi-State Cooperative Society (under the Multi-State Cooperative Societies Act, 2002) β
- Cooperative Society (under State/Union Territory Cooperative Societies Acts) β
- Age of the Entity: The entity must be within 10 years of its incorporation or registration. β
- Turnover: The annual turnover of the entity must not exceed βΉ200 crore in any financial year since its incorporation or registration. β
- Purpose: The entity must focus on innovation, development, or improvement of products, processes, or services, or have a scalable business model with high potential for employment generation or wealth creation. β
What is a Deep Tech Startup?
A Deep Tech Startup is a specialized type of startup that meets the above criteria and also:
- Works on solutions based on new scientific or engineering advancements. β
- Allocates a significant percentage of its revenue or funding to research and development (R&D). β
- Owns or is developing novel intellectual property (IP) with plans for commercialization. β
- Faces extended development timelines, long gestation periods, high capital requirements, and scientific or technical uncertainties. β
Deep Tech Startups enjoy extended benefits:
- Age Limit: Up to 20 years from incorporation or registration. β
- Turnover Limit: βΉ300 crore for any financial year since incorporation or registration. β
Recognition Process
The notification outlines a clear process for recognizing eligible entities as startups or deep tech startups:
- Application Submission: Entities must apply through the DPIIT portal, providing:
- Certificate of Incorporation or Registration. β
- A detailed write-up explaining the nature of the business, focusing on innovation, scalability, employment generation, or wealth creation. β
- Additional documents for Deep Tech Startups to demonstrate compliance with the specified attributes. β
- Evaluation by DPIIT: DPIIT will review the application, request additional documents or information if necessary, and either:
- Recognize the entity as a startup or deep tech startup, or β
- Reject the application with reasons. β
Certification for Tax Benefits under Section 80-IAC β
Startups and Deep Tech Startups that meet the conditions specified under Section 80-IAC of the Income-tax Act, 1961, can apply for tax benefits. β The process involves submitting Form-1 along with supporting documents, such as:
- Certificate of Incorporation/Registration. β
- Memorandum of Association, LLP/Partnership Deed, or Board Resolution. β
- Audited accounts for the last three financial years (if applicable). β
- Evidence of innovation, scalability, employment generation, and economic impact. β
The Inter-Ministerial Board of Certification, comprising representatives from DPIIT, the Department of Biotechnology, and the Department of Science & Technology, will evaluate the application and either grant or reject the certificate.
Conditions for Startups
To ensure that startups focus on their core business activities, the notification specifies restrictions on certain investments and activities during the recognition period. β Startups are prohibited from investing in:
- Residential properties not used for business purposes. β
- Non-residential properties not used for business purposes. β
- Loans and advances, except when lending is a core business activity. β
- Capital contributions to other entities unless directly related to business objectives. β
- High-value assets like motor vehicles, yachts, or luxury items unless used for business operations. β
- Speculative or non-productive activities as notified by the Central Government. β
Revocation of Certification β
The notification empowers the Inter-Ministerial Board to revoke certifications if they were obtained based on false information. β Once revoked, the certificate will be deemed never to have been issued. β
Relaxations and Modifications β
The Central Government reserves the right to relax or modify the conditions for startups or deep tech startups in special circumstances, either for specific classes of startups or individual cases. β
Impact of the Notification
This notification is a significant step in promoting innovation and entrepreneurship in India. By extending the age and turnover limits for Deep Tech Startups, the government acknowledges the unique challenges faced by entities working on cutting-edge technologies. β The streamlined recognition and certification process will encourage more startups to apply for benefits under the Income-tax Act, fostering a culture of innovation and economic growth.
Additionally, the restrictions on non-productive investments ensure that startups remain focused on their core business activities, further enhancing their potential for success. β
Conclusion
The Ministry of Commerce and Industryβs notification is a forward-thinking initiative that aims to create a conducive environment for startups and deep tech startups in India. By providing clear definitions, processes, and benefits, the government is paving the way for a robust startup ecosystem that can drive innovation, create jobs, and contribute to the nationβs economic development.
In case you face any issues related to Indirect Tax-Customs, GST, Foreign Trade Policy (FTP), Arbitration matters and Central Licensing and related advisory matters in India then please feel free to get in touch with SJ EXIM Services.
We offer Legal advice and litigation support in matters related to Indirect Tax-Customs, FTP, other Indirect Tax matters & Arbitration law, all sorts of Central licensing and related matters. Come and explore the new way of doing business with us!
Source: DPIIT
Handy Download:
Connect with us for more-
@ Team S J EXIM SERVICES, New Delhi, IN
CP: Ms. Shubhra Jha, Founder
Tel: +91-11-4999 2707 I +91-9999005693
Web: www.sjexim.services
EMAIL: operations@sjexim.services I shubhra@sjexim.services
Facebook: www.facebook.com/sjeximservices
LinkedIn: https://www.linkedin.com/company/90794255/admin/feed/posts/
YouTube: https://www.youtube.com/@sjeximIndia
Subscribe our WhatsApp Channel: https://whatsapp.com/channel/0029VaTxDT8JZg4CHEOSoK47
Subscribe our Telegram Channel: https://t.me/sjeximindia
Leave a Reply