What is a Startup?
A startup is a newly established business formed to solve a problem using innovation, technology, or scalable ideas. As per the Government of India, an entity is considered a startup if it is less than 10 years old, has an annual turnover below Rs. 100 crore, and works towards innovation or product development rather than traditional trading.
Why Should a Startup Get Recognised?
Startup recognition provides multiple benefits such as easier compliance, self-certification under labour and environment laws, access to government funding schemes, patent fee concessions, tax exemptions, and improved credibility with investors. Compliance consultants like MACS Edge help entrepreneurs with company incorporation, documentation, and startup recognition under state and national frameworks.
Kerala Startup Mission (KSUM) Registration
Kerala Startup Mission is the state-level authority that promotes entrepreneurship. Startups in Kerala can apply by submitting company details, pitch deck and innovation summary through the KSUM portal. Once approved, startups receive recognition along with benefits such as incubation support, grants, innovation funding and mentorship. Startups often take professional support for preparing pitch decks, funding applications and compliance documentation.
Eligibility for KSUM Recognition
To qualify, the business must be incorporated in Kerala as a Private Limited Company, LLP or Partnership Firm, be less than 10 years old, have turnover within Rs. 100 crore, and be working on innovation, technology, or product development. Pure trading, marketing or reselling businesses are not eligible.
DPIIT – National Startup Recognition (Startup India)
Under the Department for Promotion of Industry and Internal Trade (DPIIT), startups can apply for national-level recognition on the Startup India portal. Recognition offers benefits such as reduced compliance burden, intellectual property rights support, fast-track patent examination, exemption from angel tax, and access to government tenders.
Eligibility for DPIIT Recognition
Eligible entities include Private Limited Companies, LLPs and Registered Partnerships. The entity must be less than 10 years old, with turnover below Rs. 100 crore, and working towards innovation, design, improvement of products or services. It should not be formed by splitting an existing business.
Income Tax Benefits for Startups – Section 80-IAC
DPIIT-recognised startups can apply to the Inter-Ministerial Board (IMB) for income tax exemption under Section 80-IAC. Once approved, startups can claim 100% tax deduction on profits for 3 consecutive financial years out of the first 10 years of incorporation. This helps preserve capital for reinvestment and growth.
Other Tax Advantages Available
Recognised startups may also benefit from:
- Angel Tax Exemption under Section 56(2)(viib)
- Capital Gains Exemption under Section 54GB
- Carry forward of losses even if there is a change in shareholding
MACS Edge support startups in preparing financial projections, declarations and IMB submissions to claim these benefits.
Difference Between KSUM, DPIIT & Income Tax Exemption
- KSUM – State-level recognition (Kerala), grants, incubation, innovation funding.
- DPIIT – National-level recognition, legal compliance relief, patent rebates, access to Startup India benefits.
- Income Tax Exemption – Granted by IMB after DPIIT approval; offers tax holiday under Section 80-IAC.
Startups typically follow the sequence: Incorporation → KSUM/DPIIT Recognition → Tax Exemption.
Role of MACS Edge – Professional Startup Support
MACS Edge provides end-to-end support for company incorporation, LLP registration, drafting partnership deeds, DPIIT registration, KSUM application, tax exemption filing, legal documentation, compliance management and investor documentation. This ensures the startup is registered correctly and remains legally compliant while founders focus on business and innovation.
Frequently Asked Questions (FAQs)
Can a proprietorship become a startup?
No. Only Private Limited Companies, LLPs or Registered Partnership Firms are eligible.
Does Startup India recognition automatically grant tax exemption?
No. A separate application must be submitted to the Inter-Ministerial Board (IMB).
How long does DPIIT recognition take?
Normally 3–7 working days if all documents are valid.
Can service-based businesses apply for startup recognition?
Yes, if the service is innovation-driven, technology-based or scalable.
Do I need both KSUM and DPIIT recognition?
Not compulsory, but highly beneficial for availing both state and national-level benefits.
Startup recognition under KSUM, DPIIT and Income Tax laws provides credibility, funding access, compliance relief and tax savings. With structured documentation and professional guidance, the process becomes smooth and hassle-free. MACS Edge ensures that startups are legally structured, properly registered and fully compliant while unlocking all eligible government benefits.
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