DPIIT Start-Up Recognition: Tax Perks & Compliance Checklist

Start-up founders in India can significantly reduce tax burdens and regulatory friction by obtaining DPIIT Start-Up Recognition. Beyond boosting brand credibility, DPIIT recognition unlocks several tax exemptions, angel tax protection, and ease-of-doing-business incentives.

This blog explains the 2025 eligibility rules, key tax benefits, and compliance checklist for start-ups seeking DPIIT recognition.

Legal Reference

• Notification G.S.R. 127(E) dated 19.02.2019, Start-up India Scheme
• Governing Body: Department for Promotion of Industry and Internal Trade (DPIIT) under Ministry of Commerce & Industry

Who Can Apply for DPIIT Recognition?

Your entity must satisfy the following:

• Incorporated as a Private Limited Company, Registered Partnership Firm, or LLP
• Should not be older than 10 years from date of incorporation
• Turnover must not have exceeded ₹100 crore in any year since incorporation
• Should be working towards innovation, development, improvement of products or services, or scalable business models with high employment or wealth creation potential

Major Tax Benefits of DPIIT Recognition

How to Apply for DPIIT Start-Up Recognition (Step-by-Step)

1. Incorporate your business under Companies Act/Partnership Act/LLP Act
2. Create a Start-up India profile at https://www.startupindia.gov.in
3. Submit the DPIIT Recognition application with:
   • Company PAN
   • Incorporation/registration certificate
   • Details of business innovation, products, and team
4. Self-certify compliance with labour and environment laws
5. Wait for approval: Recognition usually granted within 10–15 working days if documentation is proper.

Post-Recognition Compliance Checklist

• File for Form 56 exemption (Angel Tax) separately if planning a funding round
• Maintain proper financial records and yearly updates to DPIIT
• Claim Section 80-IAC only after filing Form 1 with CBDT post-approval
• Ensure that innovation/business improvement continues; avoid purely trading businesses
• Keep DPIIT certificate handy during fundraising due diligence

Important Notes

• DPIIT recognition alone does not automatically grant tax holiday under Section 80-IAC. You must apply separately.
• DPIIT certificate helps in patent filing fast-track, tender exemptions, and compliance relaxations.
• Recognition is entity-specific and does not cover group companies automatically.

Example

Company ABC Pvt Ltd:

• Incorporated in March 2021
• Annual turnover till date ₹4 crore
• Working on AI-based SaaS platform
• Planning seed funding in FY 2025–26

Eligible for DPIIT Recognition
Can claim Angel Tax exemption post Form 56 filing
Can apply for 80-IAC 100% income tax holiday once profitable

Conclusion

DPIIT recognition is a critical early move for Indian start-ups, offering financial savings, funding eligibility, and regulatory ease. Every founder serious about scaling should secure it and align future funding, tax planning, and compliance processes accordingly.

Call to Action and Disclaimer

Need help filing for DPIIT Start-up Recognition or claiming Angel Tax/80-IAC benefits?

Schedule a meeting with our Chartered Accountant, Anshul Goyal, by visiting:

Disclaimer: I am Anshul Goyal, a Chartered Accountant licensed with ICAI, India. This content is for general awareness and should not substitute professional advice.

Frequently Asked Questions

1. Is DPIIT recognition lifetime valid?
It is valid until your entity turns 10 years old or crosses ₹100 crore turnover.

2. Does DPIIT guarantee Angel Tax exemption?
It gives eligibility. You must separately file Form 56 and get CBDT approval.

3. Can LLPs apply for DPIIT recognition?
Yes. Registered LLPs are eligible.

4. Can a start-up apply for DPIIT recognition after raising funds?
Yes, but it is better to apply before a fundraising round for maximum benefits.

5. What documents are needed for DPIIT application?
Incorporation certificate, PAN, brief pitch on innovation/solution, and key founders’ details.