Legal basis: G.S.R. 108(E) dated 4 February 2026, Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry. Replaces G.S.R. 127(E) dated 19 February 2019. Effective: 4 February 2026. Source: https://startupindia.gov.in. Last reviewed by CA Harun Raaj: January 2026.
DPIIT's Gazette Notification G.S.R. 108(E) issued on 4 February 2026 replaces the entire Startup)) India recognition framework from 2019. Three material changes affect your eligibility: cooperative societies can now apply for DPIIT recognition for the first time, the annual turnover ceiling doubles to ₹200 crore, and a Deep Tech category offers a 20-year recognition window instead of the standard 10 years. If your startup was rejected under the 2019 rules due to structure or turnover, you may now qualify. But the path to the income-tax holiday under Section 80-IAC remains a two-step process — and most founders miss the second step.
Key point: DPIIT recognition (Step 1) is necessary but not sufficient for the Section 80-IAC tax holiday; Inter-Ministerial Board certification (Step 2) is mandatory and separate.
What Changed: 2019 vs 2026 Framework
Cooperative Societies: Now Eligible
The 2019 framework recognised only Private Limited Companies, Limited Liability Partnerships, and Partnership Firms. G.S.R. 108(E) now adds:
- Multi-State Cooperative Societies registered under the Multi-State Cooperative Societies Act, 2002
- Cooperative societies registered under any State or Union Territory Cooperative Societies Act
This opens DPIIT recognition to agritech cooperatives, healthcare collectives, manufacturing co-ops, and shared-service platforms structured as cooperatives. To qualify, the cooperative must still meet the innovation criterion and fall within the turnover ceiling for its category (₹200 crore general; ₹300 crore Deep Tech).
The Deep Tech Category
To qualify under the Deep Tech category, an enterprise must demonstrate:
- New scientific or engineering knowledge as the foundational basis — not incremental improvement on existing technology
- High R&D expenditure relative to turnover (benchmarked by DPIIT)
- Novel intellectual property with clear commercialization plans (patents, trade secrets, or unpublished proprietary methods)
- Substantial technical uncertainty in the development or deployment process
Typical sectors: Artificial Intelligence, Biotech, Quantum Computing, Space Technology, Robotics, Advanced Materials, and Semiconductor Design.
Key benefit: Deep Tech startups get a ₹300 crore turnover cap (vs ₹200 crore for general startups) and a 20-year recognition window — double the standard 10 years. This extended window is material for capital-intensive deeptech ventures with long commercialization cycles.
What DPIIT Recognition Unlocks
Once your startup receives DPIIT recognition at startupindia.gov.in, you gain access to:
- Self-certification for labour and environment laws: Compliance certification valid up to 5 years for labour law matters; 1 year for non-hazardous environmental matters (no external audit required)
- IP fee rebates and fast-track examination: 80% rebate on patent fees; expedited patent examination
- GeM Startup Runway: Exemption from prior-experience and turnover criteria in government procurement tenders
- Debt and equity funding: Access to DPIIT Fund of Funds (₹10,000 crore, SIDBI-managed) channelled through registered Category II Alternate Investment Funds
- Section 80-IAC eligibility: Pathway to apply for income-tax holiday (requires separate IMB certification)
- ESOP tax deferral: Under Section 392(3), Income-tax Act 2025 — TDS deferral up to 60 months for employees of DPIIT-recognised + IMB-certified startups
- Angel tax removal: Section 56(2)(viib) no longer applies to resident investors under the Finance Act 2024
Section 80-IAC: The Two-Step Path to the Tax Holiday
DPIIT recognition is necessary but not sufficient for the Section 80-IAC income-tax holiday. This is the most widely missed step.
The full path:
- Obtain DPIIT recognition at startupindia.gov.in (free; 7–14 days typical processing) — upload certificate of incorporation, PAN, latest audited financials, and a brief on your innovative activity
- File for Inter-Ministerial Board (IMB) certification — separately certify that your business meets the "eligible business" criteria via incometax.gov.in
- Once IMB-certified, claim 100% deduction of profits for any 3 consecutive assessment years within the first 10 years of incorporation under Section 80-IAC, Income-tax Act 2025
Many startups obtain DPIIT recognition and stop — losing the entire ₹80-IAC holiday because they never apply for IMB certification. The two applications are independent and must both be filed.
Application Process
- Visit startupindia.gov.in and apply for DPIIT recognition (no fee)
- Upload: Certificate of Incorporation, PAN, latest audited financial statements, brief description of innovation, and proof of Unique Identification Number (UIN) if applying as a cooperative
- Typical processing: 7–14 days
- For the income-tax holiday: After receiving DPIIT recognition, separately file Form 1 (startup declaration) to the Inter-Ministerial Board via incometax.gov.in
- For ESOP deferral benefits: Ensure you hold both DPIIT recognition and IMB certification before claiming TDS deferral under Section 392(3)
Who Should Apply in 2026
If your startup meets any of these conditions, re-evaluate your eligibility under G.S.R. 108(E):
- Structured as a cooperative society (previously ineligible)
- Annual turnover between ₹100–200 crore (previously over the cap; now eligible)
- Operating in Deep Tech sectors (AI, Biotech, Quantum, Space, Robotics, Advanced Materials) with a turnover up to ₹300 crore
- Incorporated within the last 10 years and engaged in innovative activity
I'm CA Harun Raaj. If this affects your company's capital-raising plan or tax-holiday timeline, reach out.
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See Also
Frequently asked questions
Can a cooperative society incorporated before 2016 apply for DPIIT recognition in 2026?
Yes, if the cooperative is within 10 years of incorporation from the date of application and meets the innovation and turnover criteria under G.S.R. 108(E). A cooperative incorporated in 2016 is within the window. Verify current eligibility and turnover cap (₹200 crore general, ₹300 crore Deep Tech) at startupindia.gov.in.
Does DPIIT recognition automatically give me the Section 80-IAC income-tax holiday?
No. DPIIT recognition is Step 1; you must separately apply to the Inter-Ministerial Board (IMB) for certification — this is Step 2. Only after IMB certification can you claim the 100% profit deduction under Section 80-IAC for any 3 consecutive assessment years within 10 years of incorporation. Missing the IMB step costs most startups the entire tax holiday.
Can a One Person Company (OPC) apply for DPIIT recognition under G.S.R. 108(E)?
Yes. An OPC is incorporated as a Private Limited Company under the Companies Act 2013, which qualifies as an eligible entity under G.S.R. 108(E), provided it meets the innovation and turnover criteria.
What is the difference between the general startup and Deep Tech category under G.S.R. 108(E)?
General startups: ₹200 crore turnover cap, 10-year recognition window. Deep Tech startups (AI, Biotech, Quantum Computing, Space Tech, Robotics, Advanced Materials): ₹300 crore turnover cap, 20-year recognition window. Deep Tech requires demonstration of novel scientific or engineering knowledge, high R&D spend, patents or trade secrets, and substantial technical uncertainty.
If my startup's turnover exceeded ₹100 crore but is under ₹200 crore, can I now apply?
Yes. Under G.S.R. 108(E) (2026), the turnover cap for general startups is ₹200 crore (doubled from ₹100 crore under G.S.R. 127(E) 2019). If you were previously ineligible due to exceeding the ₹100 crore cap, you may now qualify. Apply at startupindia.gov.in and verify eligibility from the current gazette notification.
Do I need both DPIIT and IMB certification to claim the ESOP TDS deferral under Section 392(3)?
Yes. Section 392(3), Income-tax Act 2025, allows up to 60 months of TDS deferral on ESOP grants for employees of DPIIT-recognised startups that are also IMB-certified as eligible businesses. You must hold both certifications to claim this benefit.
What documents do I need to upload when applying for DPIIT recognition?
Certificate of Incorporation, PAN, latest audited financial statements, a brief description of your innovative activity (how your product or service is novel), and for cooperatives, proof of UIN (Unique Identification Number). Processing typically takes 7–14 days at startupindia.gov.in.
Are angel investments subject to tax under Section 56(2)(viib) if I have DPIIT recognition?
No. Section 56(2)(viib) was removed by the Finance Act 2024 for resident investors, regardless of DPIIT status. This removes the angel tax on share premium for startups and their investors.
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