This is a very good question, but not easy to answer.
– "Civilization" is a term connected to the idea of an evolutionary progress of societies. It is sometimes still used as a synonym for "culture", but what you are really interested in is the concept of "archaeological cultures".
– Cultures are a classification system of the very beginning of archaeology. The assumption was that similarities in material culture indicate similarity in culture, and "a culture" is the same as "a people" or race. In a very simplified form, entire cultures were often grouped around a single type of pottery or grave, or language. In a more complex form, entire assemblages of finds (found in the same context) are used for these comparisons.
– These days archaeologists recognize cultures as a modern construct, which might or might not correspond to a common cultural identity in the past (which, likewise, is a social construct). What constitutes a culture and which similarities are important for this classification depends on your definitions of "culture".
– The original cultures defined during the 19th/early 20th century are still used, since we did not really come up with anything better. There is an ongoing and heavy debate around this topic.
– Cultures are often divided into chronological periods, i.e. Late, Middle, Early, or A1, B1, B2 and so on. Some differences in the material are related to chronology, while there are still similarities that are sufficient to classify it at the same culture. This too is an archaeological construct which rests on several assumptions and cross-references (and sometimes turns out to be wrong). This means that two settlements can be separated by several hundred years, yet still belong to the same culture. Only when there are very hard breaks in material culture (often connected to assumed migration events), archaeologists declare a culture to have "ended".
– In specific archaeologies all of this can differ greatly, so you will have to look this up for your specific case. I do not know much about Indian archaeology, but from a short literature review it seems like the Indus valley culture was classified around the first major excavation of Harappa. This formed the basis to which all other sites were later compared to. I would say that the criteria are:
- similarities in material culture, in particular pottery (form and style), figurines and jewellery
- use of seals with distinct symbols
- use of the Indus script (possibly a writing script, maybe just signs)
- use of the same language (linguistic assumption)
- planned, fairly sophisticated cities, with similar layout
- long distance trade network
- similar religious ideas (this seems to be a heavily discussed topic)
Archaeologists of the 19th century were impressed enough by all of this to call the Indus valley culture a "civilisation". I would however not be surprised if there are people who disagree with this classification. There is probably also a discourse about the early work of British archaeologists in occupied India and how they introduced these Western concepts and ideas about culture, civilization, and so on.
