If you register your company as a DPIIT-recognized Startup, you can save on stamp duty for increasing authorized share capital and access funding up to ₹25 crore without a merchant banker’s certificate under the Startup India initiative. Here’s how:

1. Saving Stamp Duty on Authorized Share Capital Increase

• DPIIT Recognition: Get recognized under the Department for Promotion of Industry and Internal Trade (DPIIT) via the Startup India portal.
• Stamp Duty Exemptions: Some states like Delhi, Maharashtra, Rajasthan, Karnataka, and Madhya Pradesh provide stamp duty rebates on share capital increases for recognized startups.
• Process:
  1. Apply for DPIIT recognition at Startup India.
  2. Check if your state offers stamp duty exemption under its Startup Policy.
  3. File Form SH-7 with the Ministry of Corporate Affairs (MCA) for increasing authorized capital, ensuring exemption is applied.

2. Raise Funding Up to ₹25 Crore Without a Merchant Banker’s Certificate

Startups that are DPIIT-recognized can raise funds under Section 56(2)(viib) of the Income Tax Act without requiring a merchant banker’s valuation certificate for share issuance at a premium.

• Eligibility:
  • DPIIT-recognized startup.
  • Paid-up capital & share premium should not exceed ₹25 crore.
  • Investors should be resident Indian investors, alternative investment funds (AIFs), or Category I FPIs.
• Benefits:
  • No Angel Tax: Exemption from Section 56(2)(viib), meaning investments above fair market value (FMV) won’t be taxed.
  • Simplified Fundraising: No need for merchant banker valuation, reducing compliance burden.
  • Better Investor Interest: Since investors don’t need to worry about additional tax liability.
• Process:
  1. Apply for DPIIT Recognition on Startup India Portal.
  2. File Form 2 with CBDT to claim angel tax exemption.
  3. Raise funds from eligible investors without a merchant banker certificate.

Final Steps

✅ Get DPIIT Startup Recognition
✅ Check & Avail Stamp Duty Exemptions in your state
✅ File Form 2 with CBDT for Angel Tax Exemption
✅ Increase Authorized Capital & Raise Funds Without Merchant Banker’s Certificate

Would you like assistance in applying for DPIIT recognition or checking state-specific exemptions? 🚀

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