As per the link here the version can be either 2.5 or 3.0. But my requirement is to have the version anything greater that 3.4 in 3.x series.
How this can be done? Should I go via scrip file? Or is there a simple setup in xml file itself?
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You don't have to use only 2.5 or 3.0, you can also use 3.4 or any other Joomla version:
<extension type="component" version="3.4" method="upgrade">
The version attribute specifies the minimum Joomla! version needed for your extension, ie your extension will work with 3.4 and every version after that.