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Startup India Schemes 2026 — Every Benefit Explained

Plain-English guide to every Government of India startup scheme — DPIIT recognition, tax holidays, angel tax exemption, SISFS seed fund, IPR rebates, public procurement relaxations, and state-level top-ups. Updated May 2026.

Based on DPIIT + Income Tax Act + SIDBI notifications

Schemes covered on this page

DPIITTax holidayAngel taxSISFSFFS80-JJAAIPRGovt tendersClosureState schemes

What a founder should know upfront

  • DPIIT recognition is FREE — your gateway to every other Startup India benefit
  • Section 80-IAC: 100% tax holiday for 3 consecutive years (in first 10 years of incorporation)
  • Angel tax exemption — file Form 2 before every fundraising round at premium
  • SISFS: up to ₹20L grant + ₹50L convertible note from govt-empanelled incubators
  • Section 80-JJAA: 30% deduction on new employee cost for 3 yrs (₹25K/mo cap)
  • IPR: 80% rebate on patent fees + 50% on trademark fees + fast-track examination
  • Govt tenders: no prior experience or turnover criteria, EMD waiver

Scheme-wise breakdown

1 of 10

DPIIT Recognition (Startup India Certificate)

Department for Promotion of Industry & Internal Trade

The gateway certificate. Without DPIIT recognition, you don't qualify for any Startup India tax/funding benefit. Free to apply, takes 1–14 working days.

Benefit
Unlocks all Startup India benefits — tax holiday, angel tax exemption, IPR fast-track, govt tender relaxations, fast-track closure.
Eligibility
Incorporated as Pvt Ltd / LLP / Registered Partnership. Less than 10 years old. Annual turnover < ₹100 crore in any of the previous financial years.
How to apply
Apply at startupindia.gov.in with PAN, incorporation cert, brief on innovation, and supporting documents.
Key points
  • Free certificate — no fee
  • Auto-renewal until startup turns 10 yrs or turnover > ₹100 cr
  • Working on a 'innovation/improvement of products/processes/services' is the key test
  • Even bootstrapped startups qualify — no funding requirement
  • Listed on startupindia.gov.in directory for visibility
2 of 10

Tax Holiday — Section 80-IAC

Income Tax Department (via DPIIT recommendation)

3-year 100% tax holiday on profits, claimable in any 3 consecutive years out of first 10 years of incorporation. Saves 25-30% income tax on every rupee of profit.

Benefit
100% deduction on profits/gains from business — effectively zero income tax for the chosen 3 years (excluding MAT/AMT in some cases).
Eligibility
DPIIT-recognised + incorporated between Apr 2016 and Mar 2026 + turnover < ₹100 cr in claim year. Must apply for tax holiday certificate separately to Inter-Ministerial Board (IMB).
How to apply
Apply for IMB certificate via startupindia.gov.in. Once approved, claim deduction in ITR for chosen 3 years.
Key points
  • Choose best 3 years — usually years 3-5 when first profits arrive
  • MAT (Minimum Alternate Tax) at 9% may still apply during the holiday
  • Doesn't apply to capital gains, only business profits
  • Sunset clause: incorporation must be before 31 Mar 2026 — extended periodically in Union Budget
Watch-out
Strict scrutiny — IMB approves only innovative startups. Routine trading/import-export businesses rarely qualify.
3 of 10

Angel Tax Exemption — Section 56(2)(viib)

Income Tax Department + DPIIT

Funds raised at premium above FMV are normally taxed as 'income from other sources'. DPIIT-recognised startups get exemption — but only with formal certificate (not auto).

Benefit
No tax on excess of issue price over fair market value — applies to investments by individuals, family members, and Cat I/II AIFs.
Eligibility
DPIIT-recognised + aggregate paid-up capital + share premium ≤ ₹25 crore + not invested in immovable property, vehicles, securities, etc.
How to apply
File Form 2 declaration online at startupindia.gov.in within the FY of share allotment.
Key points
  • Applies to angel investors, individual investors, family
  • Doesn't cover Cat III AIFs or foreign investors (separate rules apply)
  • Must file declaration BEFORE raising — retrospective exemption rarely granted
  • Investor must have minimum net worth of ₹2 cr or average income ₹50L+ over last 3 yrs
Watch-out
If you raised funds at a premium without Form 2 filing, the entire excess is taxable at 30%. Many early startups face this trap — file at every round.
4 of 10

SISFS — Startup India Seed Fund Scheme

DPIIT (operated by SIDBI + 200+ incubators)

₹945 crore corpus to provide grants and seed capital to startups via DPIIT-empanelled incubators. Up to ₹20L grant + ₹50L convertible note per startup.

Benefit
₹20L grant for proof of concept / prototyping. Or up to ₹50L as convertible debenture or debt for market entry, scaling.
Eligibility
DPIIT-recognised, incorporated within 2 yrs of application, ≤ ₹40L raised earlier from govt sources, working on innovative product/service.
How to apply
Apply via seedfund.startupindia.gov.in. Choose 1-3 empanelled incubators; selected incubator disburses funds.
Key points
  • Grant (no equity dilution): up to ₹20 lakh
  • Convertible debentures / loans: up to ₹50 lakh
  • 200+ empanelled incubators across India
  • Selection: 2-stage process at incubator + final approval at SIDBI
  • Tranches: 30% upfront, 30% on milestone 1, 40% on milestone 2
Watch-out
Highly competitive — ~5-10% acceptance rate at top incubators. Apply to multiple incubators in parallel. Even 'grant' funds are recovered if you fail milestones.
5 of 10

Fund of Funds for Startups (FFS)

SIDBI (₹10,000 cr corpus managed for govt)

Govt doesn't invest directly in startups. Instead, ₹10,000 cr is allocated across 100+ SEBI-registered Cat I/II AIFs which then invest in DPIIT-recognised startups.

Benefit
Indirect access to growth capital via AIFs (₹5 cr to ₹50 cr typical ticket size). FFS commits up to 35% of an AIF's corpus.
Eligibility
AIF must commit minimum 2× the FFS contribution to startups, with at least 50% to DPIIT-recognised startups in early/growth stage.
How to apply
Startups don't apply directly — pitch to AIFs that have received FFS commitment. List of supported AIFs at sidbivcfunds.in.
Key points
  • Total deployment: ₹10,000 cr across 5,000+ startups (as of FY24-25)
  • Notable AIFs supported: Blume Ventures, Kalaari, Inflection Point, IIM Calcutta Innovation Park, Indian Angel Network Fund
  • Indirect benefit — your AIF investor is partly govt-backed
  • Doesn't dilute your equity differently — same as normal AIF round
6 of 10

Section 80-JJAA — Hiring Tax Benefit

Income Tax Department

30% deduction on additional employee cost for 3 consecutive years — encourages employment generation. Available to all businesses including DPIIT-recognised startups.

Benefit
30% deduction of additional employee cost for new employees (salary < ₹25,000/mo) employed for 240+ days in the FY. Repeated for 3 years.
Eligibility
Any business with audited accounts (44AB) + employs new employees on payroll. Salary ≤ ₹25,000/mo per employee. Each employee must be employed for 240+ days.
How to apply
Claim in ITR — Form 10DA certified by CA + Form 10D for each additional employee.
Key points
  • 30% of additional employee cost is fully deductible (above and beyond the salary expense)
  • Repeated for years 1, 2, 3 — so effectively 90% deduction over 3 years
  • First-time employer: any new hire counts. Existing employer: only net additional headcount
  • Doesn't apply to contractors, only on-payroll employees
Watch-out
240-day rule is strict — if employee leaves before 240 days in claim year, that headcount doesn't count. Plan hires carefully across financial year.
7 of 10

IPR — Patent + Trademark Fast-Track

Office of Controller General of Patents, Designs & Trademarks (CGPDTM)

80% rebate on patent filing fees, 50% rebate on trademark filing fees, plus fast-track examination (12 months vs. 5 years for normal applications).

Benefit
Patent fee: ₹1,600 (vs ₹8,000 for individual, ₹40,000 for company). Trademark fee: ₹4,500 (vs ₹9,000 individual, ₹9,000 small entity). Examination in 12 months.
Eligibility
DPIIT-recognised startup + Form 28 certification at filing.
How to apply
File via ipindia.gov.in with Form 28 (startup declaration) + DPIIT certificate.
Key points
  • Patent: 80% rebate + fast-track examination
  • Trademark: 50% rebate
  • Free panel of empanelled patent agents (govt-funded legal help)
  • Design + copyright: standard process, no special rebate
8 of 10

Public Procurement Relaxations

Ministry of MSME + Department of Expenditure

DPIIT startups exempt from 'prior experience' and 'turnover' criteria in govt tenders. Earnest Money Deposit (EMD) waived. Opens up the ₹4 lakh crore+ public procurement market.

Benefit
Bid on govt tenders without past experience or revenue history. EMD waiver. Faster payment (45-day mandate via TReDS).
Eligibility
DPIIT-recognised + quality and technical specifications must be met.
How to apply
Register on Government e-Marketplace (GeM) + Central Public Procurement Portal (CPPP). Upload DPIIT cert for verification.
Key points
  • No prior experience required to bid
  • No annual turnover minimum
  • EMD (Earnest Money Deposit) waived — saves 2-5% of contract value upfront
  • GeM portal: 1.5 lakh+ govt buyers, ₹4 lakh cr cumulative procurement
  • Payment within 45 days mandated (vs traditional 90-180 days)
Watch-out
Quality/technical bar is still strict — relaxations don't lower product requirements. Some L1 tenders favour incumbents despite startup relaxations.
9 of 10

Fast-Track Winding-Up

Insolvency & Bankruptcy Board of India (IBBI)

Most startups fail. Section 14A of IBC allows DPIIT startups with 'simple debt structure' to wind up in 90 days vs 2+ years standard process. Less painful exit.

Benefit
90-day fast-track closure instead of typical 2-year IBC process. Lower legal costs, faster director liability discharge.
Eligibility
DPIIT-recognised + no outstanding statutory dues + simple debt structure (no secured creditors except for working capital).
How to apply
File via IBBI insolvency professional. Apply for fast-track under Section 14A.
Key points
  • 90-day timeline vs traditional 2+ year IBC closure
  • Reduced legal + professional fees
  • Director liability discharge in 90 days
  • Available even if you have minor unpaid creditors
Watch-out
Fast-track is fast-track of bankruptcy court, NOT voluntary closure. Routine non-IBC winding-up via FTE scheme remains separate path for clean exits.
10 of 10

State-Level Schemes (Top 5)

Various state IT/Industries departments

Most progressive states layer their own grants, subsidies, and tax breaks on top of central schemes. Karnataka, Maharashtra, Gujarat, Telangana, Kerala lead the field.

Benefit
₹5L-₹50L additional grants + lease/rent reimbursement + interest subsidy + tier-1 city Co-working subsidies, depending on state.
Eligibility
Varies — typically state-domiciled DPIIT-recognised startups.
How to apply
Each state has its own portal — Elevate Karnataka, MaharashtraStartupYatra, StartupGujarat, T-Hub Telangana, KSUM Kerala.
Key points
  • Karnataka Elevate: ₹50L grants to deep-tech, agritech, healthtech startups
  • Maharashtra StartupYatra: ₹15L matching grants + Mumbai/Pune incubator support
  • Telangana T-Hub + TASK: free workspace + ₹5L seed support
  • Kerala Startup Mission (KSUM): ₹15L+ rent reimbursement + lease support
  • Gujarat IT Park: 25% capital subsidy + interest subvention

Startup India FAQ

How do I get DPIIT recognition for my startup?

Apply at startupindia.gov.in with: PAN of entity, certificate of incorporation, brief on what's innovative about your product/service, and supporting documents. Processing takes 1-14 working days. It's free. Your entity must be: incorporated as Pvt Ltd / LLP / Registered Partnership, less than 10 years old, and turnover under ₹100 cr in any year.

Is angel tax really exempted now?

Yes, but only for DPIIT-recognised startups + you must file Form 2 declaration before each fundraising round. If you raise from individuals/family/Cat I-II AIFs above fair market value WITHOUT filing Form 2, the excess is taxed at 30%. Many early-stage founders miss this — file at every round, even small angel rounds.

What's the difference between SISFS and Fund of Funds?

SISFS (Startup India Seed Fund Scheme) is DIRECT funding to early-stage startups via empanelled incubators — up to ₹20L grant + ₹50L convertible. Fund of Funds (FFS) is INDIRECT — govt deploys ₹10,000 cr across SEBI-registered AIFs which then invest in startups. SISFS is for ideation/seed; FFS reaches you via Blume/Kalaari/IPV-type VCs at growth stage.

Can I claim the Section 80-IAC tax holiday after my startup is profitable?

Yes — you choose any 3 consecutive years out of the first 10 years of incorporation. Most startups choose years 3-5 when first real profits arrive. Apply for IMB (Inter-Ministerial Board) certificate via startupindia.gov.in BEFORE claiming deduction in ITR. Note: MAT/AMT may still apply during the holiday.

Do these schemes apply to LLPs and Partnerships?

DPIIT recognition: yes, applies to Pvt Ltd, LLP, and Registered Partnerships (Sole Proprietorships excluded). Tax holiday (80-IAC): only Pvt Ltd companies + LLPs. Angel tax exemption: only Pvt Ltd. SISFS: any DPIIT-recognised entity. State schemes: vary — most require Pvt Ltd. If you're early-stage, register as Pvt Ltd to access maximum benefits.

Can foreign founders get DPIIT recognition?

Yes, if the entity is incorporated in India. The founders/directors can be Indian or foreign nationals. The Indian entity itself must meet all criteria (turnover, age, innovation). For Pvt Ltd, at least 1 Indian resident director is mandatory under Companies Act. FDI rules apply separately.

What's the success rate of getting SISFS funded?

Roughly 5-10% at the empanelled-incubator stage (each incubator screens hundreds of applications). Better strategy: apply to 3-5 incubators in parallel, target ones aligned with your sector (Atal Incubation Centres for deep-tech, NSRCEL for B2B SaaS, etc.). Have a working MVP — incubators favour startups with traction, not pure ideas.

Disclaimer: Scheme details, eligibility, and sunset dates change via Union Budget and DPIIT/IMB notifications. Always verify current rules at startupindia.gov.in before relying on any benefit in your cap-table or financials. Consult a CA/CS for tax-holiday + angel-tax filings.

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