Startup India recognition: the 3-year tax holiday most founders never claim

DPIIT recognition is free, the application takes 2 to 3 weeks, and if you also qualify for the tax exemption it gives you three years of zero income tax on business profits. Almost every eligible startup we meet has not applied, usually because nobody told them.

Who qualifies for recognition

• Incorporated as a private limited company, LLP or registered partnership firm in India
• Less than 10 years since incorporation
• Annual turnover under ₹100 crore in every year so far
• Working on innovation, development or improvement of products or services (this is the subjective part)
• Not formed by splitting up or reconstructing an existing business

Benefits beyond the tax holiday

Self-certification under several labour and environmental laws (fewer inspections), a large rebate on patent filing fees, easier norms for government tenders, and access to the Fund of Funds for startups managed by SIDBI.

The application

Apply online at startupindia.gov.in. You need your incorporation certificate, PAN, a short description of what makes the business innovative, and one supporting document such as an award, funding proof, patent or incubator letter.

Claiming the tax holiday

Recognition alone does not give you the tax holiday. You need a separate certificate from the Inter-Ministerial Board, and only private limited companies and LLPs are eligible for it (not partnership firms). That process is slower and has a stricter bar on innovation. Once granted, you choose any 3 consecutive years within your first 10 years, and profits in those years are tax-free.

If you are in the first few years of a startup and expect to be profitable, this is worth pursuing. We help with both the DPIIT recognition and the board application.

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