In the first part of M2K’s Startup Series, we’re starting with the basics: how a business gets officially recognised as a startup in India. This isn’t just a formality — recognition unlocks real benefits like tax relief, easier compliance, and faster processes that can make a big difference for early-stage founders.
But not every business qualifies. There are specific rules about what counts as a startup, what kind of companies are eligible, and how to actually apply. This blog breaks down all of that, keeping it simple, clear, and practical.
Startup recognition
To be officially recognised as a startup under the Government of India’s Startup India initiative, a business needs to tick a few boxes. It’s not just about being new — it’s about being the right kind of new.
Nature of entity
The business must be structured in one of three ways:
- A private limited company
- A registered partnership firm
- Or a limited liability partnership (LLP)
Other setups like sole proprietorships don’t make the cut here. This rule ensures that only formally registered and accountable businesses get recognised.
Age of entity
From the date of incorporation, the business must be less than 10 years old. If your company has already crossed that 10-year mark, even if it’s small or still growing, it won’t qualify.
Annual turnover
To stay eligible, the company’s turnover can’t exceed ₹100 crore in any financial year since it started. Once that threshold is crossed, you’re out of the startup category — regardless of your growth story.
Nature of business
Recognition isn’t just about paperwork — it’s about what the business is trying to do. It must be focused on creating or improving a product, process, or service, or it should have a scalable model with real potential to generate jobs or wealth. Simply repeating an existing idea won’t qualify.
Formation
There’s one more catch: the startup must not have been created by splitting or reconstructing an existing business. The aim here is to support new, original ventures — not old companies in new wrappers.
Key Benefits
Once a business gets recognised, several benefits kick in. These aren’t just minor perks — they’re major changes that can reduce financial strain, save time, and help the business grow faster.
Tax holiday
Recognised startups can claim a tax holiday for three consecutive years within the first ten years from their incorporation. That’s a significant boost — especially during the early years when profits are usually being reinvested.
Self-certification under laws
Startups can self-certify compliance under nine labour laws and three environmental laws. Plus, they’re shielded from routine labour inspections for the first five years. That’s time and energy saved on paperwork and red tape.
Simplified exit
If a startup needs to shut down, it can apply for winding up and close within 90 days. Compared to the usual long, drawn-out exit processes, this is a much smoother path.
Support with IP filings
Startups get their patent applications fast-tracked, and the government even covers the cost of facilitators. On top of that, they receive an 80% rebate on the filing fee. This helps protect intellectual property without burning a hole in the budget.
Access to public tenders
Recognised startups also enjoy relaxation in public procurement norms. They can bid for government contracts even without prior experience or a large turnover, which opens up big opportunities that would otherwise be out of reach.
Application process
Getting recognised as a startup isn’t a complicated process — but you do need to follow the steps and get the documentation right.
How to apply
The application is entirely online. You’ll need to head to the Startup India portal or use the mobile app created by the Department for Promotion of Industry and Internal Trade (DPIIT).
Visit: www.startupindia.gov.in
What you need to submit
There are two main things you need:
- A Certificate of Incorporation or Registration
- A write-up explaining what your business does, how it’s innovative, and how it contributes to either job creation or wealth creation
This write-up isn’t just a formality — it’s a key part of how DPIIT evaluates whether your startup qualifies.
Getting approval
Once you submit everything, DPIIT might ask for a few more details or supporting documents. If your application meets the criteria, they’ll issue a recognition certificate. That certificate is what unlocks all the benefits mentioned earlier.
What’s coming next in the Startup Series?
This is just the beginning. Over the next few weeks, we’ll cover nine more topics that matter deeply to founders navigating India’s startup ecosystem.
Here’s a quick preview:
- #2 – Taxability of share premium
- #3 – Tax on ESOPs
- #4 – Carry forward of losses with changing shareholding
- #5 – Capital gains exemption for startup investments
- #6 – Tax holiday in detail
- #7 – Exchange control provisions
- #8 – Labour law relaxations
- #9 – Startup India Seed Fund
- #10 – Other regulatory provisions and benefits
Each one will break down complex regulations in plain language — so you don’t have to guess what’s important or what applies to you.
Wrapping up
If you’re building something new and solving real problems, getting recognised as a startup is worth looking into. It’s not just about ticking boxes — it’s about accessing a structure that supports your growth while saving time, money, and energy.
Make sure your business structure is eligible. Keep your documents ready. And don’t rush the write-up — that’s your chance to show how your idea is different, and why it matters.
If you have any doubts or need help preparing the application, M2K Advisors is here to support you. Recognition is just step one — but it’s a powerful one.
