The Startup India Scheme eligibility criteria define which businesses can receive official recognition, tax benefits and funding support under the Government of India’s flagship entrepreneurship programme.
Launched on 16 January 2016, the Startup India initiative promotes innovation-driven enterprises by providing financial assistance, tax exemptions, compliance relaxations and improved access to capital.
What is the start-up India scheme?
The Start-up India scheme was initiated by the Central Government on 16th January 2016 to boost entrepreneurship in India. It aims to offer easy financing options for start-ups in the country as these entities may face difficulty accessing formal loans. The scheme provides funding between Rs. 10 lakh and Rs. 1 crore to SC, ST, and women entrepreneurs. However, considering the strict criteria, it is likely that many won’t qualify under the scheme. In such cases, another viable option is the Bajaj Finserv Loan Against Property.
The Start-up India scheme eligibility criteria
To qualify under the Startup India Scheme, businesses must meet specific conditions prescribed under DPIIT guidelines. Below is a structured overview of the eligibility requirements:
1. Age of the entity (vintage)
- The startup must not be more than 10 years old from the date of incorporation or registration.
- Earlier norms allowed up to 5 years, but updated DPIIT guidelines now permit recognition for up to 10 years.
2. Type of organisation
Eligible entities include:
- Private Limited Companies under the Companies Act, 2013
- Limited Liability Partnerships under the LLP Act, 2008
- Registered Partnership Firms under the Indian Partnership Act, 1932
3. Annual turnover limit
- The annual turnover must not exceed Rs. 100 crore in any financial year since incorporation.
4. Innovation requirement
The startup must:
- Develop or improve a product, service or process
- Be driven by technology or intellectual property
- Demonstrate scalability with potential for employment generation or wealth creation
5. Not formed by splitting or reconstruction
- The entity must not be formed by splitting up an existing business
- It should not be a reconstruction of an already operating company
6. Approvals and recognition
To avail benefits under the Startup India Scheme, recognition from DPIIT is required. Supporting documentation may include:
- Approval from the Inter-Ministerial Board
- Recommendation from a recognised incubator
- Proof of patent filing or published intellectual property
- Funding support documentation from government schemes, if applicable
Meeting these criteria ensures eligibility for recognition, tax incentives and funding support under the Startup India initiative.
Benefits of Startup India Scheme for Entrepreneurs
The Startup India Scheme offers entrepreneurs easier access to capital through various Startup India funding schemes, helping them kick-start and scale their ventures efficiently.
- Startups receive tax benefits, including a three-year tax holiday, which reduces early-stage financial burden and supports faster business growth.
- The scheme provides simplified compliance procedures, allowing founders to focus more on innovation and less on administrative tasks.
- Entrepreneurs get access to government-backed incubation centres, offering mentorship, co-working space, networking, and product development support.
- Through the Startup India Hub, founders can connect with investors, industry experts, and other startups for valuable collaborations.
- Startups benefit from faster patent filing and reduced fees, ensuring easier protection of intellectual property.
- The credit guarantee fund supports startups in obtaining collateral-free loans from banks and financial institutions.
- Entrepreneurs gain opportunities to participate in government tenders with relaxed eligibility norms.
- Training, workshops, and boot camps help founders build essential business, financial, and technical skills.
Registration and approvals required for Start Up India Scheme eligibility
To complete Startup India registration, businesses must:
- Register on the official Startup India portal
- Obtain DPIIT recognition from the Department for Promotion of Industry and Internal Trade
- Submit incorporation or registration documents
- Provide a clear business description highlighting innovation and scalability
- Upload relevant supporting documents, wherever applicable
Depending on the nature of the startup, the following approvals may also be required:
- Recommendation from a government-recognised incubator
- Proof of patent filing published in the Indian Patent Office journals
- Funding approval letter from the State or Central Government
- SEBI registration, if applicable, for funding or equity-based entities
Types of organisations eligible for the Startup India Scheme
Entities eligible for the scheme include:
- Private Limited Companies registered under the Companies Act, 2013 Limited
- Liability Partnerships (LLPs) registered under the LLP Act, 2008
- Registered Partnership Firms incorporated under the Indian Partnership Act, 1932
Common reasons for Startup India application rejection
Understanding the typical reasons for rejection can help improve your chances of approval. Applications may be declined due to:
- Incomplete or missing documentation
- Insufficient demonstration of innovation
- Unclear or weak revenue model
- Turnover exceeding the prescribed limit
- Incorrect organisational structure
- Discrepancies in submitted information
- Overly optimistic or unsupported financial projections
- Lack of clear proof of scalability or technological advancement
Ensuring compliance with the Startup India eligibility criteria significantly improves the likelihood of approval.
Tax benefits under the Startup India Scheme
The Startup India Scheme provides several tax incentives to reduce the financial burden on eligible startups and encourage innovation. Key benefits include:
- Three-year income tax exemption: Eligible startups can claim a three-year tax holiday under Section 80 IAC, allowing them to reinvest profits into business expansion.
- Capital gains tax exemption: Startups can claim an exemption on capital gains if the proceeds are invested in government-notified funds or specified assets, subject to conditions.
- Angel tax relief: Exemption from angel tax under Section 56(2)(viib) is available to recognised startups that meet the prescribed eligibility criteria.
- Reduced patent costs: Faster patent processing and lower application fees help reduce operational expenses and support innovation.
- Regulatory benefits: Timely recognition under the scheme enables access to funding support, tax exemptions and simplified compliance procedures.
These incentives strengthen early-stage financial stability and create a supportive environment for startups to scale sustainably.
Common reasons for Startup India scheme application rejection
Listed below are some of the most common reasons for application rejections:
Incomplete documentation: Many applications are rejected because entrepreneurs fail to upload required documents such as business plans, incorporation certificates, or financial statements.
Unclear business model: If the startup’s concept, revenue model, or value proposition is not clearly defined, authorities may reject the application due to a lack of clarity.
Lack of innovation: The Startup India scheme focuses on innovation-driven businesses. Applications without a unique idea, technology edge, or problem-solving approach often get declined.
- Non-eligibility under scheme criteria: Some businesses apply despite not meeting the basic criteria, such as being newly incorporated, scalable, or innovation-oriented, similar to issues seen in Stand Up India loan eligibility assessments.
- Incorrect company structure: Startups not registered as a Private Limited Company, Partnership Firm, or LLP may not qualify, leading to rejections.
- Mismatch in information: Differences between application details and official documents can cause immediate disqualification.
- Poor financial projections: Unrealistic or unsupported financial forecasts reduce the application’s credibility.
- Lack of supporting evidence: Claims related to innovation, traction, or market potential must be backed with proof; otherwise, the application may fail.
Related Government Schemes
Several government schemes support entrepreneurship and small businesses by offering funding, training, and regulatory benefits. These initiatives help startups grow, access credit, adopt innovation, and strengthen overall business development.
Frequently asked questions
Startup India offers tax benefits and incentives to eligible startups, which may include income tax exemptions, capital gains tax exemptions, tax benefits for investors, deductions for interest payments, and reduced tax rates on royalties. These benefits are subject to specific conditions and criteria, and startups must meet eligibility requirements, such as recognition by DPIIT, to avail of these incentives.
Startup India offers several benefits to support startups, including income tax exemption, capital gains tax exemption, reduced patent registration fees, relaxed public procurement norms, expedited company winding-up processes, innovation support, access to funds, simplification of regulations, networking opportunities, and recognition and certification for eligible startups. These benefits are designed to foster entrepreneurship, innovation, and the growth of startups.
The ‘Startup India’ scheme, initiated by the Indian government in 2016, aims to promote entrepreneurship and innovation in the country. It provides recognition and support to startups by simplifying registration processes, offering tax benefits, encouraging funding, and protecting intellectual property. Additionally, it promotes public procurement from startups and offers various learning and development initiatives. The scheme is geared towards fostering economic growth, job creation, and innovation in India's startup ecosystem.
The Startup India scheme offers several advantages to startups, including tax exemptions, simplified compliance processes, access to funding, intellectual property protection, opportunities for public procurement, and a dedicated hub for government interaction. It also promotes learning, innovation, and early-stage funding to support the growth and development of startups in India.
The Start-up India Scheme is an initiative by the Government of India launched in 2016 to foster the growth of start-ups across the country. It aims to create a conducive environment for start-up development, offering various benefits such as tax exemptions, funding opportunities, and simplification of regulatory processes. The scheme provides financial support, mentorship, and access to networks to encourage innovation and job creation in the start-up ecosystem.
Start-ups registered under the Start-up India Scheme can avail various tax benefits. They are eligible for a three-year income tax exemption, provided they are incorporated between April 1, 2016, and March 31, 2021, and satisfy the criteria set by the Department for Promotion of Industry and Internal Trade (DPIIT). Additionally, start-ups can benefit from a simplified assessment process and exemption from the "angel tax" on funding received from accredited investors.
The Start-up India Scheme facilitates the protection of intellectual property for start-ups through the Intellectual Property Rights (IPR) facilitation cell. Start-ups can avail a rebate in the filing of patents, trademarks, and designs. The government aims to promote innovation by reducing the financial burden on start-ups seeking protection for their intellectual property. The scheme also provides legal assistance and guidance to start-ups in navigating the complexities of intellectual property rights.
To qualify as a startup, the entity must be less than 10 years old, have annual turnover under Rs. 100 crore, and be recognized by DPIIT with innovation-driven goals.
Under the Start Up India Scheme, eligible businesses can receive collateral-free loans up to Rs. 10.5 crore, depending on business requirements, profile, and financial eligibility as determined by lending institutions.
The scheme aims to foster innovation, support economic growth, and generate employment by promoting entrepreneurship through tax benefits, funding support, regulatory simplification, and easier access to credit facilities.
The Start Up India Scheme was officially launched by the Government of India on January 16, 2016, to encourage entrepreneurship and strengthen India’s startup ecosystem with supportive measures.
