Registering a startup in India, and what recognition is worth
Incorporation is the easy part. What decides how the next three years go is the structure you pick, the things you do in the first 180 days, and whether you understand what DPIIT recognition does and does not give you. India changed the startup definition in February 2026, so a good deal of what is published on this subject is now out of date.
Last checked 3 August 2026.
General information, not advice. Take professional advice before acting.
Private limited, LLP, or one person company
This is not a matter of taste. It is a constraint on who can put money in and what they can hold when they do, and reversing it later costs you time at exactly the moment you have none.
| Private limited company | LLP | One person company | |
|---|---|---|---|
| Can issue equity, preference shares and convertibles | Yes | No. The LLP Act has no concept of share capital, so there is nothing for a term sheet to attach to | Yes in principle, but it has one member |
| Statutory ESOPs | Yes, under section 62(1)(b) | No statutory scheme. Contractual profit-share units carry none of the protections and none of the tax deferral | Impractical |
| Foreign investment | Permitted, subject to the sector | Only in sectors where 100% is allowed automatically with no performance conditions; capital contribution or profit share only, and no convertible instrument at all | Permitted, subject to the same one-member problem |
| Adding a second shareholder | Routine | Routine (partners) | Legally impossible without converting first |
| Statutory audit | Every year, from year one, regardless of turnover | Only above ₹40 lakh turnover or ₹25 lakh contribution | Every year, from year one |
| Layers of tax on distributed profit | Two: company tax, then tax on the dividend in the shareholder’s hands | One: profit share is exempt in the partners’ hands | Two |
| Eligible for DPIIT recognition | Yes | Yes | Yes. An OPC is a private company and applies under that category |
| Eligible for the Section 80-IAC deduction | Yes, with the certificate | Yes, with the certificate, but see the minimum-tax point below | Yes, with the certificate |
What incorporation actually involves
One integrated application, four linked forms, and roughly ten to fifteen working days if the documents are in order. Most of the delay in practice is document preparation, not the Registrar.
- Reserve the name. Two names are submitted in SPICe+ Part A. Approval usually comes within one to two working days and the reservation holds for 20 days.
- File Part B with everything attached. The incorporation application carries the electronic memorandum and articles, the AGILE-PRO-S form and the declaration in INC-9. Director identification numbers are allotted through this filing for a maximum of three directors; a fourth must apply separately afterwards.
- Collect what the filing delivers. The certificate of incorporation, company identification number, PAN and TAN, provident fund and employee state insurance registration, and a bank account. Goods and services tax registration is optional at this stage. Profession tax is registered automatically only in Karnataka, Maharashtra and West Bengal, and shops and establishment registration only in Mumbai and Delhi. Everywhere else these are separate applications, and in Delhi, Haryana, Uttar Pradesh and Rajasthan profession tax is not levied at all.
- Put the money in. Every subscriber must actually pay for the shares they subscribed. This sounds obvious and is skipped constantly, and it is a precondition to the filing described in the next section.
You need a minimum of two directors and two shareholders. At least one director must stay in India for 182 days in the financial year, and for a company incorporated part-way through a year that test applies proportionately, so a company formed in December does not need 182 days in its first year. A founder on an overseas passport who plans to visit occasionally cannot be your only director.
What it costs. For a standard private limited company or one person company, budget an indicative all-inclusive professional cost of ₹60,000 to ₹2,60,000. Treat that as an estimate rather than a price list: it excludes exceptional stamp duty, filing fees that scale with authorised capital, documentation for overseas subscribers, and any sector licence. Stamp duty on the memorandum and articles is a state levy and varies by an order of magnitude between states, so no national figure would be right for most readers. This range is EXI’s own estimate, confirmed 4 August 2026, not a statutory or published figure.
The first 180 days, and the filing everyone forgets
Incorporation gives you a company. It does not give you permission to trade. Four things have to happen quickly, and the deadlines are short enough that they are usually missed by founders doing this themselves.
| What | By when | What happens if you miss it |
|---|---|---|
| Appoint the first statutory auditor, a board decision | Within 30 days of registration. If the board does not, the members must appoint within 90 days at an extraordinary general meeting | You cannot close your first year properly. File Form ADT-1 within 15 days of the appointment |
| Hold the first board meeting | Within 30 days of incorporation | A governance defect that surfaces in the first diligence exercise you go through |
| Receive the subscription money into the company’s bank account | Before filing the declaration below | The declaration would be false, which is a materially more serious exposure than filing it late |
| File Form INC-20A, the declaration of commencement of business | Within 180 days of incorporation | ₹50,000 on the company and ₹1,000 per day on every officer in default up to ₹1 lakh. The company may not borrow or commence business until it is filed, and the Registrar may strike it off. Registrars have imposed this penalty for a single day’s delay |
DPIIT recognition under the February 2026 rules
The definition of a startup was replaced on 4 February 2026. The thresholds moved, a new deep tech category was created, and two new entity types became eligible. Anything you read describing a ₹100 crore turnover limit is describing the old rule.
| Criterion | Standard startup | Deep tech startup |
|---|---|---|
| Age from incorporation or registration | Up to 10 years | Up to 20 years |
| Turnover ceiling in any financial year | ₹200 crore | ₹300 crore |
| Eligible entity types | Private limited company, registered partnership firm, limited liability partnership, multi-state cooperative society, or a state or union territory registered cooperative society | Same |
| Nature of the business | Working towards innovation, development or improvement of products, processes or services, or a scalable business model with high potential for employment generation or wealth creation | Additionally: built on new scientific or engineering knowledge, high research and development spend, significant novel intellectual property, long development timelines and high technical uncertainty |
| Absolute bar | An entity formed by splitting up or reconstruction of an existing business is not a startup | Same |
You apply through the Startup India portal with your incorporation certificate and a description of the business. The notification does not commit to a turnaround time, and it expressly contemplates rejection with reasons, so recognition is not automatic on filing, whatever the two-day estimates circulating online suggest. The 2026 rules also introduced a negative list restricting deployment of funds into residential real estate, luxury assets and speculative ventures.
One thing to hold on to: recognition and the tax holiday now use different numbers in different statutes. The ₹200 crore ceiling above is a Ministry of Commerce threshold for recognition. The Income-tax Act sets its own, separate limit for the deduction, and a Ministry notification cannot change a tax statute. A company can comfortably be a recognised startup and be outside the deduction entirely.
If you are already recognised, you do not re-apply. Certificates granted under the 2019 notification remain valid, provided the company still meets the conditions on which recognition can cease. Supersession of the notification does not reset anyone’s recognition, and the portal continues to allow existing certificates to be validated and amended.
The three-year tax holiday, and the certificate you actually need
Section 80-IAC of the Income-tax Act 1961, re-enacted as section 140 of the Income-tax Act 2025 which took effect on 1 April 2026, allows a deduction of 100% of the profits of the eligible business for any three consecutive years within the first ten years from incorporation. It is available to a company or an LLP. It is not available to a partnership firm or a cooperative society, even though both can now be recognised.
It does not come with recognition. It requires a separate certificate of eligible business from the Inter-Ministerial Board, applied for on its own and granted in batches. Around 3,700 have been issued since 2016, against 2.12 lakh recognitions. Complete applications are reviewed within 120 days, and there is no statutory appeal from a refusal — you re-apply.
The company must have been incorporated on or after 1 April 2016 and before 1 April 2030. That date has been extended five times. It is a hard sunset and should not be assumed to move again.
The turnover ceiling for the deduction is ₹300 crore, with effect from 1 April 2026. It was ₹100 crore before that. Note that this is a different number from the ₹200 crore recognition ceiling above, set by a different ministry under a different statute, and the two move independently.
Once you are registered
Goods and services tax registration is not automatic and is not always needed at incorporation. It is driven by turnover thresholds and by a list of triggers that ignore turnover entirely, one of which catches almost every company paying a foreign software vendor. Provident fund and insurance obligations start at headcount thresholds, not at recognition. Import-export code is only needed if you actually import or export. All three, and the annual calendar they generate, are covered in Guide 3.
And if a funding round is what prompted you to read this, Guide 2 is the one to read next. Several of the things that go wrong in a round are decided at formation.
Get the structure right before it costs you a round.
An hour on this now is routinely cheaper than the conversion, the re-papering and the delay later.
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This page is general information, not professional advice. Indian tax, exchange control and company law positions change frequently, and how any of them applies depends on your specific facts. Take professional advice before acting on anything on this page. We are happy to be that adviser, but do not act on a web page, ours or anyone else’s, without one.