DPIIT Recognition for a Foreign Owned Startup in India (2026)

Written by CA Nandini Hasija, Krystal7 Consultants. Last updated 23 October 2026.

DPIIT recognition under G.S.R. 108(E) of 4 Feb 2026 covers a private limited company, LLP, partnership firm or cooperative society. It must be up to 10 years old, with turnover up to INR 200 crore. A deep tech startup gets 20 years and INR 300 crore. A foreign owned company faces two further bars in DPIIT's recognition guidelines. Subsidiaries, including foreign subsidiaries, are not recognised, and Indian promoters must hold at least 51 percent.

This page covers eligibility under the 2026 notification and what foreign ownership changes. It also covers the NSWS application, the benefits, the section 140 tax holiday with the IMB certificate, and the common rejection reasons.

What is DPIIT recognition and who is eligible?

DPIIT recognition is the Department for Promotion of Industry and Internal Trade's certificate that an entity is a startup. Under G.S.R. 108(E) of 4 Feb 2026, an eligible entity is incorporated or registered in India and is up to 10 years old. Its turnover has not exceeded INR 200 crore in any financial year. It works on innovation or a scalable model.

The notification replaced G.S.R. 127(E) of 19 Feb 2019. It is dated 4 Feb 2026 and took effect on publication in the Gazette of India. PIB announced the change in a release of 5 Feb 2026, which says the turnover limit rose from INR 100 crore to INR 200 crore.

Paragraph 1(a) of the notification sets four tests:

1. Form. A private limited company, a partnership firm, a limited liability partnership, a multi state cooperative society or a state cooperative society.
2. Age. Up to ten years from incorporation or registration.
3. Turnover. Not more than INR 200 crore in any financial year since incorporation or registration. Turnover has the meaning in section 2(91) of the Companies Act, 2013.
4. Purpose. Working towards innovation, development or improvement of products, processes or services. A scalable business model with high potential for jobs or wealth creation also qualifies.

A proviso excludes an entity formed by splitting up or reconstructing a business already in existence. An entity stops being a startup after ten years, or once its turnover for any previous year crosses INR 200 crore.

Test	G.S.R. 127(E), 19 Feb 2019	G.S.R. 108(E), 4 Feb 2026
Entity forms	Private limited company, partnership firm, LLP	Adds multi state and state cooperative societies
Age limit	10 years	10 years; 20 years for a deep tech startup
Turnover limit	INR 100 crore in any financial year	INR 200 crore; INR 300 crore for a deep tech startup
Purpose test	Innovation or scalable model	Same
Splitting or reconstruction	Excluded	Excluded
Investment restrictions	Linked to the angel tax exemption	Apply for the whole recognition period

What is a deep tech startup under the 2026 notification?

A deep tech startup is a startup that works on a solution based on new scientific or engineering knowledge. It spends heavily on R&D compared with its revenue or funding. It owns or is creating significant novel IP and is taking steps to commercialise it. It stays recognised for 20 years, with turnover up to INR 300 crore.

The notification adds a fourth attribute. The business faces long development timelines, long gestation periods and high capital and infrastructure needs. DPIIT decides eligibility under its own framework and guidelines. A deep tech applicant files extra documents showing that it meets these attributes.

Deep tech status changes the recognition limits only. It does not change the tax holiday conditions. Section 140 of the Income Tax Act, 2025 still applies its own turnover limit of INR 100 crore and its own incorporation window.

Can a foreign owned startup get DPIIT recognition?

Usually not. The notification itself is silent on ownership. DPIIT's guidelines for recognition of startups, linked from the Startup India recognition page, say holding and subsidiary companies will not be recognised. The heading names foreign holding and foreign subsidiaries. They also require Indian promoters to hold at least 51 percent.

Paragraph 4 of the guidelines carries five rules that decide most foreign owned cases:

1. Holding and subsidiary companies will not be permitted for recognition.
2. A startup that becomes a holding or subsidiary company after recognition will be derecognised.
3. An entity formed by a joint venture will not be recognised, and a startup that enters a joint venture will be derecognised.
4. Entities incorporated outside India are ineligible.
5. Shareholding by Indian promoters in the startup should be at least 51 percent, read with the Companies Act, 2013 and the SEBI ICDR Regulations, 2018.

So a wholly owned subsidiary of a US or UK company cannot be recognised. Neither can a company in which a foreign parent holds a controlling stake. A company owned by foreign founders who hold more than 49 percent between them fails the 51 percent test.

Foreign investors as such are not a bar. A startup with Indian promoters holding 51 percent can take foreign venture money and foreign angel investors. The FEMA rules for that investment apply as for any Indian company.

The guidelines are undated, and they do not define "Indian promoter". Clause 4(iv) says only that the holding should be at least 51 percent "as per Companies Act, 2013 and SEBI (ICDR) Regulations, 2018". The application form on the Startup India recognition page asks the startup to certify two things. The first is the 51 percent holding. The second is that it is not a subsidiary of any Indian or foreign entity or a holding company. DPIIT relies on that self certification. Neither document says how often the 51 percent is tested after recognition. Neither says how NRI and OCI holdings count. Before you count an NRI or OCI founder towards the 51 percent, check the current guidelines and the form on the Startup India page, and ask DPIIT in writing.

Ownership structure	Recognition outcome under the guidelines	Why
Wholly owned subsidiary of a foreign company	Not recognised	Subsidiary companies are excluded
Foreign company holds a controlling stake	Not recognised	Subsidiary under section 2(87) of the Companies Act, 2013
Foreign individual founders hold 60 percent, Indian co founder 40 percent	Not recognised	Indian promoters below 51 percent
Indian founders hold 55 percent, foreign VC fund 45 percent	Can be recognised	Indian promoters at 51 percent or more and not a subsidiary
Indian startup sets up a US sales subsidiary after recognition	Derecognised	A startup that becomes a holding company is derecognised
Joint venture between an Indian startup and a foreign company	Not recognised	Joint venture entities are excluded
Company incorporated abroad	Not recognised	Entities incorporated outside India are ineligible

The second rule bites on growing startups. A recognised Indian startup that opens a subsidiary abroad becomes a holding company. Under the guidelines, it loses recognition. We advise founders to weigh that before they set up a foreign sales company. The same point arises after a reverse flip, when the Indian company inherits the foreign group's subsidiaries.

Which structures work for a foreign founder?

A foreign founder can get recognition only through an Indian entity where Indian promoters hold at least 51 percent and no company sits above it. That usually means an Indian co founder with majority equity. A foreign parent company structure and recognition do not go together under the current guidelines.

The choices we discuss with foreign founders:

1. Indian majority promoter company. The foreign founder holds up to 49 percent directly, as an individual. The company files FC-GPR for the foreign founder's shares and can apply for recognition.
2. Foreign parent subsidiary. The parent owns the Indian company. The structure gives control and simple consolidation, but no recognition. Our page on the wholly owned subsidiary in India covers that route.
3. LLP with Indian majority partners. An LLP can be recognised. FDI in an LLP is allowed under the automatic route in sectors that permit 100 percent FDI without conditions. The same 51 percent and no holding company rules apply.

A foreign founder should not choose the structure for recognition alone. Most of the benefits are modest for a company that is profitable early or that bills its parent. We compare them with the cost of giving up control in the benefits table below. For the company law side, see company registration in India for foreign founders.

How do you apply for DPIIT recognition on NSWS?

The startup applies on the National Single Window System (NSWS) at nsws.gov.in. It adds the "Registration as a Startup" approval under Central Approvals, fills the form and uploads the documents. Paragraph 2 of the notification asks for the certificate of incorporation or registration and a write up on innovation or scalability. DPIIT charges no fee.

The Startup India recognition page sets out the steps:

1. Create an investor account on NSWS, if the entity has none.
2. Log in and open "Add Approvals", then "Central Approvals".
3. Add "Registration as a Startup".
4. Fill the form and upload the supporting documents.
5. Submit, and track the status through the Application Status link on the Startup India page.

The page asks entities to apply on their own, with their own details, mobile number and email. It says no fee is charged for the Certificate of Recognition or the Certificate of Eligibility. It also says DPIIT has appointed no agency or franchise for these certificates.

In our filings, the NSWS form also asks for details of the directors or partners and an authorised representative. Where the representative is not the signing director, we attach a letter of authorisation from the board. We also give a website or a product deck, any patents or trademarks, and funding details.

The write up decides most applications. DPIIT reads it against the purpose test in paragraph 1(a). We write it around four points. They are the problem, what is new in the product or process, how it scales, and the evidence, such as users, pilots or IP filings. A business that resells products or provides standard services needs a clear explanation of what is new.

Under paragraph 2, DPIIT may recognise the entity or reject the application with reasons. The page publishes no processing time. It lists an "Edit Your Expired Application" option but does not explain the resubmission process.

What benefits does DPIIT recognition give?

Recognition opens a set of separate schemes, each with its own rules. The main ones are self certification under some labour and environment laws, lower patent fees and faster examination, company law relaxations and public procurement relaxations. It also opens the section 140 tax holiday, subject to an IMB certificate. DPIIT's Startup Playbook of April 2026 lists them.

Benefit	What it gives	Law or scheme	Extra approval needed
Tax holiday	100 percent profit deduction for 3 consecutive years out of 10	Section 140, Income Tax Act, 2025 (old 80-IAC)	IMB certificate in Form 1
Loss carry forward	Shareholding continuity rule relaxed for eligible startups	Section 119(3), Income Tax Act, 2025 (old 79)	Eligible start up status
ESOP tax deferral	Employees defer tax on ESOPs of an eligible start up	Sections 392(3) and 289(3), Income Tax Act, 2025	Eligible start up status
Self certification	No labour inspections for a specified period, except on credible complaints	Startup India self certification scheme	Self certify on Shram Suvidha
Patent fees and speed	Lower fee column and expedited examination	Patents Rules, 2003, rules 2(fb), 7 and 24C	Form 28 with each fee bearing document
Sweat equity	Up to 50 percent of paid up capital for 10 years	Companies (Share Capital and Debentures) Rules, 2014	Shareholder approval
ESOPs to promoters	Promoters and directors above 10 percent can get ESOPs for 10 years	Companies (Share Capital and Debentures) Rules, 2014	Shareholder approval
Fast track merger	With another startup or a small company	Section 233 and rule 25	Central Government confirmation
Lower penalties	Half the penalty, with caps	Section 446B, Companies Act, 2013	None
Public procurement	Prior turnover and experience relaxed, EMD exemption	General Financial Rules, 2017	Tender conditions
Faster exit	Fast track insolvency process of 90 days against 180 days	Insolvency and Bankruptcy Code, 2016	Eligibility conditions
Funding schemes	Fund of Funds for Startups and Credit Guarantee Scheme for Startups	SIDBI and NCGTC schemes	Scheme approval

DPIIT's Tax Playbook maps the loss and ESOP rules to sections 119, 289 and 392, and the Act agrees. Section 119(3) relaxes the 51 percent voting power test for eligible startups, for losses incurred within ten years of incorporation. Section 392(3) covers the deferred tax on specified securities and sweat equity of a section 140 startup and points to the payment time in section 289(3). Our page on ESOP and RSU tax covers the employee side.

Section 446B matters more than it looks for small foreign owned groups. A subsidiary of a body corporate can never be a small company under section 2(85). So it cannot get the small company half penalty. A recognised startup can, but only if it is not a subsidiary, which brings us back to the ownership rule.

The angel tax exemption is no longer on the list. Section 56(2)(viib) of the 1961 Act stopped applying from 1 Apr 2025, and the Income Tax Act, 2025 has no successor to it. See angel tax abolished.

How does self certification under labour and environment laws work now?

The Startup India self certification page lists nine labour laws and three environment laws. A recognised startup self certifies on the Shram Suvidha portal. No labour inspections take place for 3 to 5 years, except on a credible, verifiable written complaint that a senior officer approves. The listed labour laws were repealed when the four labour codes started on 21 Nov 2025.

The self certification page, last updated on 14 Sep 2026, still names these labour laws:

1. Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996.
2. Inter State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979.
3. Payment of Gratuity Act, 1972.
4. Contract Labour (Regulation and Abolition) Act, 1970.
5. Employees' Provident Funds and Miscellaneous Provisions Act, 1952.
6. Employees' State Insurance Act, 1948.
7. Industrial Disputes Act, 1947.
8. Trade Unions Act, 1926.
9. Industrial Employment (Standing Orders) Act, 1946.

The Code on Social Security, 2020, the Industrial Relations Code, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020 replaced these Acts. They came into force on 21 Nov 2025 under S.O. 5319(E), 5320(E) and 5321(E). The central rules followed on 8 May 2026. The page does not mention the codes or say how self certification maps onto them. Before you rely on the inspection exemption, check labour.gov.in and the Shram Suvidha portal for any notice on how it applies under the four codes.

The environment side covers the Water Act, 1974, the Water Cess Act and the Air Act, 1981, for startups in the 36 white category industries. Most software and services startups sit outside the consent regime anyway. See new labour codes for foreign owned companies for what the codes require.

How do patent and trademark benefits work for startups?

Rule 2(fb) of the Patents Rules, 2003 treats an entity recognised under Startup India as a startup. A startup pays the lower fee column and can ask for expedited examination in Form 18A under rule 24C. For a foreign entity, rule 2(fb) needs only a declaration that it meets the Startup India turnover and age criteria.

That last point helps foreign groups. A foreign owned Indian subsidiary cannot be recognised, so it cannot use the domestic limb of rule 2(fb). But a foreign parent that files Indian patents in its own name can declare that it meets the turnover and age criteria. It then pays startup fees and can seek expedited examination. Rule 7(1) requires Form 28 with each fee bearing document.

The Patent Office fee schedule shows the gap for online filing:

Form	What it is	Startup column (INR, online filing)	Others (INR, online filing)
Form 1	Application for a patent, up to 30 pages and 10 claims	1,600	8,000
Form 18	Request for examination under section 11B	4,000	20,000
Form 18A	Request for expedited examination under rule 24C	8,000	60,000

The Patent Office's online text of the Patents Rules shows amendments up to 21 Sep 2021, and the Gazette text prevails over it. Our batch page on patent filing for foreign companies covers Form 27 and working statements. For trademarks, the Trade Marks Rules, 2017 put startups in the lower fee band with individuals and small enterprises. See our trademark registration service.

What is the section 140 tax holiday and how do you get the IMB certificate?

Section 140 of the Income Tax Act, 2025 replaced section 80-IAC from 1 Apr 2026. An eligible start up deducts 100 percent of its profits for any three consecutive tax years out of ten, starting from the year of incorporation. It must be a company or LLP incorporated on or after 1 Apr 2016 and before 1 Apr 2030, and hold an IMB certificate.

The conditions in section 140:

1. The entity is a company or an LLP engaged in an eligible business.
2. It was incorporated on or after 1 Apr 2016 and before 1 Apr 2030.
3. Its total turnover does not exceed INR 100 crore in the year of the claim.
4. It holds a certificate of eligible business from the Inter Ministerial Board of Certification.
5. It was not formed by splitting up or reconstructing an existing business. It was not formed by transferring used plant and machinery either, beyond the 20 percent allowance in section 140(6).
6. Its accounts are audited before the specified date under section 63, and the audit report is filed in the prescribed form.

Paragraph 3 of G.S.R. 108(E) lets a recognised private limited company or LLP apply to the Board in Form 1. The Board may grant the certificate or reject the application with reasons. The notification still refers to section 80-IAC of the 1961 Act. A footnote says the Income Tax Act, 2025 applies from 1 Apr 2026. See Income Tax Act, 2025 changes for the wider mapping.

The turnover limits do not match. DPIIT recognition allows turnover up to INR 200 crore. Section 140 allows the deduction only in a year with turnover up to INR 100 crore. DPIIT's Tax Playbook of May 2026 gives the section 140 limit as INR 300 crore, while its Startup Playbook of April 2026 gives no separate limit. The Act text on incometaxindia.gov.in says INR 100 crore. The memorandum to the Finance Bill, 2026 proposes no change to section 140. We follow the Act.

Two traps sit in the wider Act. A company may opt for the 22 percent rate in section 200 (old 115BAA). It then computes income without Chapter VIII deductions other than sections 146 and 148. Section 140 sits in Chapter VIII, so the option shuts out the tax holiday. The section 200 option cannot be withdrawn once exercised, under section 200(6). Minimum alternate tax under section 206 still applies to a company claiming section 140.

If a foreign owned company cannot claim the section 140 holiday, our guide to GIFT City IFSC for foreign companies covers a different tax route for IFSC units.

What do FEMA rules give a recognised startup?

FEMA lets a startup company raise money from non residents through convertible notes. Rule 18 of the NDI Rules covers notes bought by a person resident outside India. Each purchase must be INR 25 lakh or more in a single tranche. The notes must convert or be repaid within ten years, under the definition in rule 2(e). The startup reports the issue in Form CN within 30 days.

Rule 2(an) of the NDI Rules defines a "startup company" as a private company incorporated under the Companies Act, 2013. It must be identified as a startup under G.S.R. 127(E) of 19 Feb 2019. The NDI Rules on rbi.org.in, updated up to 2 Sep 2026, still cite the 2019 notification. On our reading, the definition should now follow G.S.R. 108(E), since that notification superseded the 2019 one.

We ask the AD bank to accept the 2026 certificate before the note is issued.

Rule 18(1) excludes citizens and entities of Pakistan and Bangladesh. Rule 18(2) requires government approval where the sector needs it, and conversion must follow the entry route, sectoral caps and pricing rules. Regulation 4(12) of FEMA 395/2019-RB requires Form CN within 30 days of the issue. A resident who transfers notes to or from a non resident also files Form CN within 30 days.

A startup company's convertible note of INR 25 lakh or more in a single tranche is also not a deposit. The Companies (Acceptance of Deposits) Rules, 2014 exclude it. For the wider FDI rules, see FDI compliance for foreign subsidiaries.

What conditions apply after recognition?

Paragraphs 4 and 5 of G.S.R. 108(E) bar certain investments for the whole recognition period. A startup must use its funds mainly for its core business, including innovation, research, scaling and operations. Breaking the conditions, becoming a subsidiary or holding company, or crossing the age or turnover limits ends the status.

The barred investments, each with exceptions for the startup's own business:

1. Residential buildings or land, unless used for its business or held as stock in trade.
2. Other land or buildings, unless used for its business or held as stock in trade.
3. Loans and advances, unless lending is a substantial part of its business or made in the ordinary course.
4. Capital contributions to other entities, unless tied to its business or strategic goals.
5. Shares and securities, unless incidental to treasury operations or part of its core business.
6. High value vehicles, aircraft or yachts, unless used for operations, leasing or hiring, or held as stock in trade.
7. Jewellery or luxury assets, unless held as stock in trade.
8. Any speculative or non productive asset the Central Government notifies.

Paragraph 6 lets the Board revoke a tax certificate obtained on false information. A revoked certificate is deemed never to have been issued. Paragraph 7 lets the Central Government relax conditions for classes of startups or individual cases.

Item 4 overlaps with the guidelines. A capital contribution to a new subsidiary may be a permitted strategic investment under paragraph 5. But the guidelines then derecognise the startup as a holding company. We test both before a recognised startup invests in another entity.

Why are DPIIT applications rejected?

DPIIT gives reasons when it rejects. The common reasons fall into two groups. Either the entity is outside the notification or the guidelines, or the write up does not show innovation or scalability. Most of the first group can be checked before filing.

Reason	Rule it fails	How to fix or avoid it
The entity is a subsidiary of an Indian or foreign company	Guidelines, paragraph 4	Restructure, or accept that recognition is unavailable
Indian promoters hold less than 51 percent	Guidelines, paragraph 4	Restructure the cap table before applying
Formed by splitting up or reconstructing an existing business	Notification, paragraph 1(a) proviso	Explain how the business is new, with dates
Formed by merger, demerger, amalgamation or arrangement	Guidelines, paragraphs 1 and 2	Only startup and small company fast track mergers are allowed
Write up does not show innovation or scalability	Notification, paragraph 1(a)(iv)	Describe what is new, how it scales and the evidence
An additional entity with the same address, line of business and a common director	Guidelines, paragraph 7	Apply for one entity or separate the businesses
Business in a domain prohibited by law	Guidelines, paragraph 9	None
Age above 10 years or turnover above INR 200 crore	Notification, paragraph 1(a)	Check the deep tech limits if they fit
Sole proprietorship	Guidelines, paragraph 10	Convert to a permitted entity first
Details that do not match MCA records, or an agent's contact details	Recognition page instructions	Use the entity's own login, email and mobile number

In our experience, the write up and the mismatched details cause most avoidable rejections. A short, specific write up with evidence works better than a long marketing text.

What changed in 2026

The new startup notification came on 4 Feb 2026, before this page's publish date of 24 Mar 2026. The tax and labour changes below came later or earlier, as dated. The text states the law as on 23 Oct 2026.

Old rule	New rule	Date	Instrument
Startup definition in G.S.R. 127(E) of 19 Feb 2019	G.S.R. 108(E), superseding it	4 Feb 2026	DPIIT notification
Turnover limit INR 100 crore	INR 200 crore; INR 300 crore for deep tech	4 Feb 2026	G.S.R. 108(E)
No deep tech category, 10 year limit for all	Deep tech startups up to 20 years	4 Feb 2026	G.S.R. 108(E)
Companies, LLPs and firms only	Cooperative societies added	4 Feb 2026	G.S.R. 108(E)
Investment restrictions linked to angel tax relief	Restrictions for the whole recognition period	4 Feb 2026	G.S.R. 108(E), paragraphs 4 and 5
Section 80-IAC, Income Tax Act, 1961	Section 140, Income Tax Act, 2025	1 Apr 2026	Act 30 of 2025
Section 79 loss rule	Section 119	1 Apr 2026	Act 30 of 2025
Nine labour Acts on the self certification list	Four labour codes in force	21 Nov 2025	S.O. 5319(E) to 5322(E)

The NDI Rules definition of a startup company still cites the 2019 notification as on 2 Sep 2026.

Worked example

TechCo Private Limited was incorporated on 15 Jun 2021. Indian founders hold 55 percent and a US fund holds 45 percent. TechCo is not a subsidiary of any company, so the guidelines allow recognition. The figures below are illustrative.

Test	TechCo's position	Result
Form	Private limited company	Passes
Age	10 years from 15 Jun 2021 run to 14 Jun 2031	Passes until 14 Jun 2031
Turnover, FY 2025-26	INR 140 crore	Passes the INR 200 crore DPIIT limit
Indian promoter holding	55 percent	Passes the 51 percent guideline
Holding or subsidiary	Neither	Passes
Section 140 window	Incorporated after 1 Apr 2016 and before 1 Apr 2030	Passes
Tax holiday turnover test for FY 2025-26	INR 140 crore	Fails for that year; the limit is INR 100 crore under section 80-IAC, and section 140 keeps it from 1 Apr 2026

TechCo stays recognised in FY 2025-26 but cannot claim the tax holiday for that year. Suppose its turnover falls to INR 90 crore in tax year 2026-27, with book profit and taxable profit both at INR 5 crore. It holds an IMB certificate and has not opted for section 200.

Item	Section 140 claimed, MAT applies	Section 200 opted instead
Normal tax on INR 5 crore	Nil after the 100 percent deduction	22 percent: INR 1.10 crore
MAT at 14 percent of book profit	INR 70.00 lakh	Not applicable
Surcharge	7 percent: INR 4.90 lakh	10 percent: INR 11.00 lakh
Health and education cess at 4 percent	INR 3.00 lakh	INR 4.84 lakh
Tax payable	INR 77.90 lakh	INR 1.2584 crore
MAT credit carried forward	INR 77.90 lakh, usable later under the MAT credit rules	None

The cash saving in the year is INR 1.2584 crore less INR 77.90 lakh, or INR 47.94 lakh. The MAT paid also creates a credit for later years. If TechCo had opted for section 200 in an earlier return, section 200(6) would lock it in, and section 140 would be unavailable.

Now take the same business as a wholly owned subsidiary of a Delaware company. The guidelines bar recognition, so section 140 never opens. The subsidiary pays tax at the section 200 rate or the normal rate. The Delaware parent can still pay startup patent fees in its own Indian filings, by declaration under rule 2(fb).

Common mistakes

1. Assuming foreign ownership is irrelevant. The notification is silent, but the guidelines exclude subsidiaries and need 51 percent Indian promoters. Fix: test the cap table against paragraph 4 of the guidelines first.
2. Setting up a foreign subsidiary after recognition. A startup that becomes a holding company is derecognised. Fix: weigh the loss of recognition before forming any subsidiary.
3. Reading the DPIIT turnover limit into section 140. Recognition allows INR 200 crore, the tax holiday only INR 100 crore. Fix: test each claim year against section 140.
4. Opting for section 200 too early. The option shuts out section 140 and cannot be withdrawn. Fix: model the holiday before exercising the option in a return.
5. Filing a marketing write up. DPIIT tests innovation or scalability. Fix: state what is new, how it scales and the evidence.
6. Applying through an agent's login. The recognition page asks entities to use their own details. Fix: create the NSWS account in the entity's name.
7. Relying on the old labour law list. The listed Acts were repealed on 21 Nov 2025. Fix: confirm how self certification applies under the codes before relying on it.
8. Ignoring the investment restrictions. Loans, property and share investments outside the core business breach paragraphs 4 and 5. Fix: check each treasury decision against the list.
9. Forgetting Form CN. Convertible notes from non residents need Form CN within 30 days. Fix: diarise it with the note's issue date.

For help with the application and the IMB certificate, see our Startup India registration service.

Checklist

1. Check the entity form, age and turnover against paragraph 1(a) of G.S.R. 108(E).
2. Test the cap table against paragraph 4 of the DPIIT guidelines: no holding company, Indian promoters at 51 percent or more.
3. Confirm the entity was not formed by splitting up, reconstruction, merger or a joint venture.
4. Decide whether the deep tech criteria apply and gather the R&D and IP evidence.
5. Draft a write up on innovation or scalability with evidence.
6. Create an NSWS account in the entity's own name, email and mobile number.
7. Add "Registration as a Startup" under Central Approvals and upload the documents.
8. Track the application and answer any clarification from DPIIT.
9. Apply to the Inter Ministerial Board in Form 1 for the section 140 certificate, if the entity is a company or LLP.
10. Model section 140 against section 200 before exercising any tax option.
11. Check every investment against paragraphs 4 and 5 of the notification.
12. Review recognition before forming a subsidiary or a joint venture.

Frequently Asked Questions

What is DPIIT recognition?+

DPIIT recognition is a free certificate from the Department for Promotion of Industry and Internal Trade that an entity is a startup. Under G.S.R. 108(E) of 4 Feb 2026, it covers an Indian private limited company, LLP, partnership firm or cooperative society. The entity must be up to 10 years old, with turnover up to INR 200 crore, and work on innovation or a scalable model.

What is the turnover limit for DPIIT recognition in 2026?+

INR 200 crore in any financial year since incorporation, under G.S.R. 108(E) of 4 Feb 2026. A deep tech startup can have turnover up to INR 300 crore. The earlier notification, G.S.R. 127(E) of 19 Feb 2019, set INR 100 crore. Turnover has the meaning in section 2(91) of the Companies Act, 2013.

Can a subsidiary of a foreign company get DPIIT recognition?+

No. DPIIT's guidelines for recognition of startups, linked from the Startup India recognition page, say holding and subsidiary companies will not be recognised. Their heading names foreign subsidiaries. So a wholly owned or controlled Indian subsidiary of a foreign parent cannot be recognised. That holds even if it meets the tests in G.S.R. 108(E).

Can a startup with foreign investors get DPIIT recognition?+

Yes, if Indian promoters hold at least 51 percent and no company holds it as a subsidiary. DPIIT's recognition guidelines set the 51 percent Indian promoter test. Foreign venture funds and angels can invest within the remaining 49 percent. The FEMA rules on entry route, pricing and Form FC-GPR reporting apply.

What happens if a recognised startup sets up a subsidiary abroad?+

DPIIT's recognition guidelines say a startup that becomes a holding or subsidiary company after recognition will be derecognised. A recognised Indian startup that forms a foreign sales or IP subsidiary becomes a holding company. Founders should weigh the loss of recognition, and of benefits such as section 140, before forming the subsidiary.

How do I apply for DPIIT recognition?+

Apply on the National Single Window System at nsws.gov.in. Create an investor account, open Add Approvals and then Central Approvals, and add "Registration as a Startup". Upload the certificate of incorporation and a write up on innovation or scalability, as paragraph 2 of G.S.R. 108(E) requires. No fee is charged.

What is a deep tech startup under DPIIT rules?+

A startup working on new scientific or engineering knowledge, with high R&D spending compared with revenue or funding. It must own or be creating significant novel IP and face long development timelines and high capital needs. G.S.R. 108(E) of 4 Feb 2026 lets it stay recognised for 20 years with turnover up to INR 300 crore.

Which section replaced 80-IAC under the Income Tax Act, 2025?+

Section 140, from 1 Apr 2026. It covers a company or LLP incorporated on or after 1 Apr 2016 and before 1 Apr 2030. The deduction is 100 percent of profits for three consecutive tax years out of ten. The entity needs an Inter Ministerial Board certificate and turnover up to INR 100 crore in the claim year.

Is the section 140 turnover limit INR 100 crore or INR 200 crore?+

INR 100 crore. Section 140 of the Income Tax Act, 2025 limits total turnover to INR 100 crore in the year of the claim. The INR 200 crore limit applies only to DPIIT recognition under G.S.R. 108(E). DPIIT's Tax Playbook of May 2026 gives a different figure, but the Act text governs the deduction.

Can a company claim section 140 and pay tax at 22 percent under section 200?+

No. Section 200 of the Income Tax Act, 2025 requires income to be computed without Chapter VIII deductions other than sections 146 and 148. Section 140 sits in Chapter VIII. Once a company opts for section 200, section 200(6) bars withdrawal, so the tax holiday stays closed in later years too.

Does DPIIT recognition exempt a startup from labour inspections?+

Partly. Under the Startup India self certification scheme, no labour inspections take place for 3 to 5 years, according to the Startup India page. The exception is a credible, verifiable written complaint that a senior officer approves. The page still lists the old labour Acts, which the four labour codes replaced on 21 Nov 2025. Check how the scheme applies under the codes.

Can a foreign company pay startup patent fees in India?+

Yes, if it declares that it meets the Startup India turnover and age criteria. Rule 2(fb) of the Patents Rules, 2003 treats such a foreign entity as a startup. It then pays the lower fee column and files Form 28 with each fee bearing document. It can also request expedited examination in Form 18A under rule 24C.

What investments are barred for a DPIIT recognised startup?+

Paragraphs 4 and 5 of G.S.R. 108(E) bar investments outside the core business during recognition. These include residential and other property, loans and advances, capital contributions, shares and securities, and high value vehicles, aircraft or yachts. Jewellery and luxury assets are also barred. Each has exceptions where it is part of the startup's own business.

Can a recognised startup issue convertible notes to foreign investors?+

Yes. Rule 18 of the FEMA Non Debt Instruments Rules, 2019 lets a person resident outside India buy convertible notes. Each purchase must be INR 25 lakh or more in a single tranche. Citizens and entities of Pakistan and Bangladesh are excluded. The startup files Form CN within 30 days of the issue under regulation 4(12) of FEMA 395/2019-RB.

Is there a fee for DPIIT recognition?+

No. The Startup India recognition page says the Ministry of Commerce and Industry charges no fee for the Certificate of Recognition or the Certificate of Eligibility. It also says no agency or franchise has been appointed to issue them. Professional fees for preparing the application are a separate matter.

Does an LLP qualify for DPIIT recognition and section 140?+

Yes. G.S.R. 108(E) includes limited liability partnerships, and section 140 of the Income Tax Act, 2025 covers a company or an LLP. The same DPIIT guideline tests apply, including the 51 percent Indian promoter holding. FDI in an LLP is allowed under the automatic route only in sectors with 100 percent automatic FDI and no conditions.

Sources

• Department for Promotion of Industry and Internal Trade, Notification G.S.R. 108(E), Gazette of India, 4 Feb 2026, https://www.startupindia.gov.in/content/dam/invest-india/Templates/public/Gazette_060226.pdf
• Press Information Bureau, Government revises startup recognition framework to strengthen Startup India Action Plan, 5 Feb 2026, https://www.pib.gov.in/PressReleasePage.aspx?PRID=2224069&reg=3&lang=1
• Startup India (DPIIT), DPIIT Startup Recognition and Tax Exemption page, https://www.startupindia.gov.in/content/sih/en/startupgov/startup_recognition_page.html
• Startup India (DPIIT), Guidelines for Recognition of Startups, undated, https://www.startupindia.gov.in/content/dam/invest-india/Templates/public/Revised%20Guidelines%20for%20recognition.pdf
• Startup India (DPIIT), Self Certification page, updated 14 Sep 2026, https://www.startupindia.gov.in/content/sih/en/startupgov/self-certification.html
• Startup India (DPIIT), Startup Playbook: Exclusive Benefits for DPIIT Recognised Startups, April 2026, https://www.startupindia.gov.in/content/dam/invest-india/HomePage/Startup-Playbook-Exclusive-Benefits-for-DPIIT-Recognised-Startups-in-India-April-2026.pdf
• Startup India (DPIIT), Tax Playbook for the Startup Ecosystem, May 2026, https://www.startupindia.gov.in/content/dam/startupindia/Tax-Playbook-for-Startup-Ecosystem-May-2026.pdf
• Income Tax Department, Income Tax Act, 2025, section 140, https://www.incometaxindia.gov.in/w/section-140-87
• Income Tax Department, Income Tax Act, 2025, section 200, https://www.incometaxindia.gov.in/w/section-200-77
• Income Tax Department, Income Tax Act, 2025, section 119 (carry forward and set off of losses) and section 392 (salary, with the eligible start up deferral), https://www.incometaxindia.gov.in/w/section-119-99 and https://www.incometaxindia.gov.in/w/section-392-6
• Income Tax Department, Exemption from Angel Tax, section 56(2)(viib) of the 1961 Act (DPIIT investment restrictions under the 2019 notification), https://www.incometaxindia.gov.in/w/exemption-from-angel-tax-section-56-2-viib-
• Ministry of Finance, Memorandum explaining the provisions in the Finance Bill, 2026, https://www.indiabudget.gov.in/doc/memo.pdf
• Startup India (DPIIT), Recognition page (application self certification of Indian promoter holding and subsidiary status), https://www.startupindia.gov.in/content/sih/en/recognition-page.html
• Office of the Controller General of Patents, Designs and Trade Marks, The Patents Rules, 2003 (online version updated to 21 Sep 2021), https://ipindia.gov.in/frontend/pdf/patents/rules/Indian_Patent_Rules_2003__1_.pdf
• Office of the Controller General of Patents, Designs and Trade Marks, First Schedule of fees, https://ipindia.gov.in/frontend/pdf/forms_and_official_fees/Schedule_1.pdf
• Reserve Bank of India, Foreign Exchange Management (Non Debt Instruments) Rules, 2019, updated up to 2 Sep 2026, https://rbi.org.in/scripts/bs_viewcontent.aspx?Id=5083
• Reserve Bank of India, Foreign Exchange Management (Mode of Payment and Reporting of Non Debt Instruments) Regulations, 2019, amended up to 13 Jun 2026, https://rbi.org.in/Scripts/NotificationUser.aspx?Id=11723&Mode=0