With the Right Planning, Startups Can Soar – Don’t Miss These Government Benefits
India is not just a land of IT services anymore — it’s now a breeding ground for innovative startups, with over one lakh DPIIT-recognized startups as of 2024. From deep-tech and EV to D2C and SaaS, startups are scaling faster than ever.
But here’s the hard truth:
Most startups fail not because of bad ideas, but because of poor structuring and missed benefits.
At K Y M & Associates, we specialize in startup compliance and growth advisory. And we’ve seen too many founders lose lakhs (sometimes crores) just because they were unaware of tax exemptions, funding schemes, or compliance requirements.
So let’s decode the benefits every startup founder in India must know and act on.
DPIIT Recognition – Your Startup Passport
Getting your startup recognized by DPIIT (Department for Promotion of Industry and Internal Trade) is the first step to unlocking a suite of government benefits. Without it, most schemes are out of reach.
Key Benefits of DPIIT Recognition:
3-Year Tax Holiday under Section 80-IAC
Angel Tax Exemption under Section 56(2)(viib)
Faster IPR processing (trademark/patent rebates)
Access to government tenders (without prior experience)
Participation in Startup India Seed Fund & Incubation programs
Pro Tip: You must apply for DPIIT before completing 10 years from incorporation and ensure turnover is under ₹100 crore.
Section 80-IAC – Save 100% Income Tax for 3 Years
Yes, you read that right.
If your startup is DPIIT recognized and meets certain conditions, you can claim 100% exemption on profits for any 3 consecutive years out of 10 under Section 80-IAC.
But here’s the catch:
You need to apply to the Inter-Ministerial Board (IMB).
You need to show innovative nature of business, not just another trading firm.
You must have clean books and proper documentation.
Many applications get rejected because of vague business models or lack of financial projections. Don’t DIY your 80-IAC application.
Angel Tax Exemption – Keep More of What You Raise
Before the exemption, funding above the fair market value (FMV) used to attract income tax under Section 56(2)(viib) — what we call the “Angel Tax.”
With DPIIT recognition, you can file for Angel Tax Exemption and ensure:
You don’t pay tax on premium amounts from investors.
You protect your equity value.
You make your company more attractive to institutional investors.
Investors feel more confident funding a startup that has this exemption letter from Income Tax Department.
Seed Fund Scheme – The Government Is Ready to Bet on You
Under the Startup India Seed Fund Scheme (SISFS), eligible startups can receive:
Up to ₹20 lakh as grant for proof of concept (PoC)
Up to ₹50 lakh as convertible debt or equity funding
This fund is routed through approved incubators, and you must:
Be DPIIT-recognized
Have a scalable business model
Not have received prior institutional funding
Don’t ignore government money while chasing private VC.
Startups Fail Due to Lack of Structure, Not Lack of Ideas
Here’s what we see every week as startup consultants in Pune:
Founders raising funds without proper shareholder agreements
Co-founders parting ways due to lack of clarity in ESOPs and roles
Startups being taxed on investments or missing ROC and tax filings
Ignorance about Section 80JJAA, R&D credits, or CGTMSE loans
When you skip legal structure, tax planning, and investor readiness, you’re not a startup — you’re a ticking time bomb.
Think IPO, Not Just MVP
If your vision ends at Series A, you’re selling yourself short.
India is encouraging startups to list on SME exchanges and even mainboard IPOs.
But only startups that are:
Compliant with ROC, tax, GST, and audit
Have SOPs, internal controls, and clean cap tables
Are structured from Day 1
…can scale to exit, attract institutional money, or go public.
Startups with the right planning raise more, scale faster, and exit better.
How K Y M & Associates Helps Startups Win
We are a startup-focused CA firm in Pune helping founders go from incorporation to exemption to investment.
Our Services:
Startup Registration & DPIIT Recognition
80-IAC & Angel Tax Exemption Filing
Seed Fund Scheme Application Support
Company Incorporation with Cap Table Structuring
ESOP Planning, Shareholder Agreements
GST, TDS, ROC & Tax Compliance
Pitch Deck & Investor Reporting Templates
IPO / SME Exchange Advisory
Don’t Be Just Another Startup. Be a Smart One.
Thousands of startups are raising funding, saving tax, and scaling profitably — not because their ideas are better, but because their planning is sharper.
If you’re a founder with vision, don’t let poor compliance kill your dream.