What does the Startup India scheme do?
The Startup India scheme is the Government’s programme for startups that the Department for Promotion of Industry and Internal Trade has recognised. Incorporation does not put the entity into the scheme. Recognition is a separate application, and the benefits are not automatic.
What is the scheme?
The programme is aimed at entities that are working on innovation or a scalable model. Who meets the tests, including the ten-year age and the turnover ceiling of ₹100 crore, is on the eligibility page. How the application is made is on the recognition page. The department was earlier called the Department of Industrial Policy and Promotion. The recognition is issued as DPIIT.
What does recognition unlock?
A recognised startup can use that status where a tender, a patent request, or a labour or environment self-certification actually provides for it. The list of those measures sits on the Startup India portal. It is not a promise that every tender drops its conditions, or that a patent fee is cut by a fixed percentage, or that the company can be wound up in a fixed number of days.
The Fund of Funds invests through alternative investment funds. It is not a cheque paid to the startup because the certificate arrived.
What does recognition not do?
It does not grant the section 80-IAC deduction. That deduction is of the profits of an eligible startup for three consecutive years, and only where the startup is recognised and the board named in the section has approved it. A share issued on or after 1 April 2025 is outside section 56(2)(viib). That is the statute, not a certificate. Udyam registration is a different programme and does not include these benefits. That distinction is on the Udyam page.
Frequently asked questions
Four questions cover who is in the scheme, the tax deduction, Udyam, and the Fund of Funds.
Is every new business in the scheme?
No. The entity has to be a private company, an LLP, or a registered partnership, and it has to be recognised by DPIIT. Age, turnover, and the innovation test are on the eligibility page.
Is the three-year tax deduction automatic?
No. Section 80-IAC needs recognition and a separate approval. The deduction is for three consecutive years out of the years that section allows.
Does Udyam registration replace it?
No. Udyam is the MSME registration. It does not recognise the entity under Startup India.
Is the Fund of Funds a cheque to the startup?
No. The Fund of Funds invests through alternative investment funds. It is not a grant paid to the company on recognition.
Sources
Startup India is administered with the Department for Promotion of Industry and Internal Trade. The deduction is section 80-IAC of the Income-tax Act. Angel tax is section 56(2)(viib).