While the Income Tax Act, 1961 does not contain an explicit standalone definition of a “startup,” the term is used in various tax incentives and regulatory provisions. For practical purposes—including the availment of certain tax benefits—the government relies on the criteria laid down under the Startup India Action Plan (issued by the Department for Promotion of Industry and Internal Trade, DPIIT).

Adopted Criteria (as per Startup India):
An enterprise is generally recognized as a startup if it meets these conditions:

• Incorporation/Registration: It must be incorporated or registered in India on or after April 1, 2016.

• Age of the Entity: It should be less than 10 years old from the date of incorporation or registration.

• Turnover Limit: Its annual turnover must not exceed ₹100 crores in any financial year.

• Innovation and Scalability: It should be engaged in innovative activities, development or improvement of products, processes, or services, or demonstrate a scalable business model with the potential for significant employment generation or wealth creation.

For tax purposes, when a business applies for startup-related benefits under various notifications (for example, schemes providing profit-linked incentives or tax exemptions), the tax authorities look to the recognition granted under the Startup India guidelines.