In a significant boost to India’s startup ecosystem, the Department for Promotion of Industry and Internal Trade (DPIIT) has approved income tax exemptions for 187 startups under its flagship Startup India initiative. The decision, finalised across two Inter-Ministerial Board (IMB) meetings, most recently on April 30, 2025, aims to incentivise early-stage ventures focused on innovation, employment generation, and economic growth.
According to official information, 112 startups were selected during the latest IMB meeting, while the remaining 75 had been approved in the previous fiscal year. These startups will receive a 100% income tax exemption for a block of three consecutive years out of their first ten years since incorporation.
Extension of Eligibility Criteria
Previously, only startups incorporated before March 31, 2025, could avail the benefit. However, recognizing the dynamic nature of India’s startup ecosystem, the government has now extended the incorporation cut-off to April 1, 2030. This move is expected to significantly expand the beneficiary base, encouraging more new-age enterprises to formalize their businesses under the Startup India umbrella.
To qualify, a startup must meet the following criteria:
- Be recognized by DPIIT as an eligible startup.
- Be incorporated as a private limited company or LLP after April 1, 2016.
- Have a turnover not exceeding ₹100 crore in any of the previous financial years.
- Not be formed by splitting up or reconstructing an existing business.
- Possess a valid certificate from the Inter-Ministerial Board of Certification.
Strategic Impetus for Economic Objectives
The tax holiday is one of the larger government initiatives to spur job creation, attract both domestic and foreign investments, and promote indigenous technological innovation. More than 3,700 startups have availed income tax exemptions since the scheme was introduced in 2017.
“These tax exemptions are a well-timed push to reduce the financial burden on founders and give them a stronger runway to scale. It’s not just about tax relief, it’s about backing ideas that solve real-world problems,” said a senior DPIIT official to FE, who requested anonymity.
Focus on High-Impact Sectors
While the government has not published a full list of the newly selected startups, sources indicate that the selections include ventures in critical sectors such as clean energy, agritech, medtech, and artificial intelligence domains identified as national priorities under the Atmanirbhar Bharat mission.
Experts note that beyond tax benefits, startups also gain from enhanced credibility through DPIIT recognition, making it easier to access government tenders, easier patent filing procedures, and funding under various public schemes like the Fund of Funds for Startups (FFS).
Future Directions
Analysts have viewed the widening of the window of eligibility to 2030 as a sign of long-term support by the government to the startup economy. As India is likely to become a $5 trillion economy, such policies are seen as foundational pillars for achieving innovation-led growth.
However, industry leaders have also called for simplification of compliance procedures and faster IMB approvals to match the pace of entrepreneurial activity on the ground.
“While the scheme is commendable, there is a need to streamline backend processes. Founders shouldn’t have to wait several quarters for certification or face bureaucratic hurdles. Speed is of the essence,” said Anjali Mehta, co-founder of a DPIIT-recognized fintech startup based in Bengaluru.
A Noteworthy Move
The approval of 187 startups for tax exemption is a noteworthy move in India’s ongoing effort to position itself as a global startup hub. As the policy environment becomes more enabling, stakeholders now look to the government for operational efficiency and clarity in execution to ensure that this support translates into tangible impact for India’s growing base of entrepreneurs.
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