The Startup India initiative, administered by the Department for Promotion of Industry and Internal Trade (DPIIT), is the gateway to India's corporate innovation incentives. The most consequential update in years arrived via Gazette Notification G.S.R. 108(E) dated 4 February 2026, which created new pathways for scaling enterprises and deep-tech ventures.
Key facts & figures — eligibility
- Entity type: a Private Limited Company, LLP, Registered Partnership Firm, or Cooperative Society (newly added in 2026). Proprietorships are excluded.
- Age: not older than 10 years from incorporation — extended to 20 years for 'Deep Tech Startups'.
- Turnover: must not exceed ₹200 crore in any year since incorporation — ₹300 crore for deep-tech startups.
- Innovation: working towards innovation, development, or improvement of products/processes, or a scalable model with high potential for wealth creation.
DPIIT recognition gives an 80% rebate on patent filing fees, a 50% rebate on trademark filings, self-certification under nine labour and three environmental laws, and access to the ₹10,000 crore SIDBI Fund of Funds 2.0. Recognition alone does not grant the income-tax exemption — an entity must separately obtain a Certificate of Eligibility from the Inter-Ministerial Board (IMB). Once secured, Section 80-IAC grants a 100% deduction of profits for any 3 consecutive years within the first 10 years.
Recent changes
The February 2026 G.S.R. 108(E) framework doubled the turnover ceiling to retain recognition from ₹100 crore to ₹200 crore, removing the 'graduation cliff' that pushed scaling startups out prematurely. A formal 'Deep Tech Startup' classification (e.g. AI, biotech, aerospace) was introduced with 20 years of recognition and a ₹300 crore ceiling.
Under the Finance Act 2025, the incorporation window to claim the Section 80-IAC tax holiday was extended by five years — from 1 April 2025 to 31 March 2030. And in major relief to investors, 'angel tax' under Section 56(2)(viib) was abolished from FY 2025-26, rendering the old exemption applications obsolete.
Common pitfalls
- The 'reconstruction rule': startups formed by splitting up or reconstructing an existing business (e.g. carving a digital division out of a legacy parent) are ineligible for DPIIT recognition and the 80-IAC holiday.
- Applying on the wrong platform — post-2026, primary DPIIT applications are largely routed through the National Single Window System (NSWS), not only the legacy Startup India portal.
- Mis-timing the 80-IAC claim — the 3-year holiday must be used within the first 10 years. Claiming too early during heavy losses wastes the effort; too late misses the window.
Frequently asked questions
Is a sole proprietorship eligible?
No. Only Private Limited Companies, LLPs, Registered Partnerships, and Cooperative Societies are eligible.
Does DPIIT recognition automatically make profits tax-free?
No. Recognition unlocks IPR rebates, GeM procurement access, and self-certification, but the 100% income-tax holiday needs a separate IMB certificate under Section 80-IAC.
What happens if turnover crosses ₹200 crore?
The entity ceases to be a recognised startup and loses prospective procurement privileges and unutilised tax holidays.
Is angel tax still a concern for funding rounds?
No. Section 56(2)(viib) was abolished effective 1 April 2025; share premiums are no longer taxed as income.
This article is for general information only and reflects our understanding of the rules at the time of writing. Tax and regulatory provisions change frequently and some references may be subject to further notification. It is not professional advice — please verify against the latest provisions, or consult a professional, before acting.