All tax exemptions and benefits available to DPIIT-recognized startups.
Startup India Benefits & Tax Exemptions
The Indian government's Startup India initiative offers substantial benefits to DPIIT-recognized startups. Here is a comprehensive overview of every benefit you can claim.
Income Tax Exemption (Section 80-IAC)
DPIIT-recognized startups can claim a tax holiday for 3 consecutive years out of the first 10 years from incorporation.
Eligibility:
Incorporated as a Private Limited Company or LLP after April 1, 2016
DPIIT recognized
Certified by the Inter-Ministerial Board (IMB)
Annual turnover does not exceed INR 100 crore in the relevant yearHow to apply:
Get DPIIT recognition first
Apply to the Inter-Ministerial Board through the Startup India portal
Submit your business plan, financial projections, and innovation description
IMB reviews and certifies eligible startups
Claim the deduction while filing ITRImportant: You can choose any 3 consecutive years within the first 10 years. Pick the years when your profits are highest to maximize the benefit.
Angel Tax Exemption (Section 56(2)(viib))
When a startup issues shares at a premium to resident investors, the premium amount above fair market value is normally taxed. DPIIT-recognized startups can get an exemption.
How to claim:
File Form 2 on the DPIIT Startup India portal
Submit last 3 years financials (or since incorporation)
Provide a merchant banker valuation report
DPIIT issues a certificate after verificationLimits:
Aggregate paid-up share capital and share premium after issue does not exceed INR 25 crore
Investor is a resident Indian (not applicable for NRI investors)
Investor's returned income in the preceding year is at least INR 25 lakh (for individuals) or net worth of INR 50 lakhSelf-Certification for Labour and Environmental Laws
DPIIT-recognized startups can self-certify compliance under:
6 Labour Laws:
The Industrial Disputes Act, 1947
The Trade Unions Act, 1926
The Building and Other Constructions Workers Act, 1996
The Industrial Employment (Standing Orders) Act, 1946
The Inter-State Migrant Workmen Act, 1979
The Payment of Gratuity Act, 19723 Environmental Laws:
The Water (Prevention & Control of Pollution) Act, 1974
The Water (Prevention & Control of Pollution) Cess Act, 1977
The Air (Prevention & Control of Pollution) Act, 1981Benefit: No inspections for 3 years. Only complaint-based inspections are allowed.
Intellectual Property Fast-Track
80% rebate on patent filing fees
50% rebate on trademark filing fees
Expedited examination of patent applications
Government-appointed facilitators to assist with IP filingPublic Procurement Benefits
Exemption from prior experience requirement in government tenders
Exemption from prior turnover requirement in government tenders
Access to Government e-Marketplace (GeM) for selling products/services to government agenciesFund of Funds
Government has set up a Fund of Funds of INR 10,000 crore managed by SIDBI
Invests in SEBI-registered AIFs which in turn invest in startups
Not a direct investment scheme, works through registered venture capital fundsEasier Winding Up
Fast-track closure process under the Insolvency and Bankruptcy Code
Simple winding up within 90 days (vs. normal 180 days)
Available for startups with assets up to INR 1 crore and turnover up to INR 50 lakhDPIIT Startup Recognition Card
Digital recognition certificate
Use in applications for government schemes
Credibility signal for investors and partnersHow to Maximize Benefits
Apply for DPIIT recognition immediately after incorporation
File for angel tax exemption before raising your first round
Use the IP fast-track for any patents or trademarks
Register on GeM if your product can serve government clients
Plan your 3-year tax holiday for maximum profit years