Do we qualify for DPIIT recognition and the section 140 tax holiday?

DPIIT recognition covers private limited companies, registered partnership firms, LLPs and cooperative societies working on innovation or scalability, up to 10 years from incorporation and turnover up to Rs200 crore in any financial year. Deep-tech startups have limits of 20 years and Rs300 crore under the notification of 4 February 2026. Section 140 of the Income-tax Act, 2025 (formerly section 80-IAC of the 1961 Act) allows 100% of profits for any 3 consecutive years out of the first 10 for an eligible company or LLP incorporated on or after 1 April 2016 and before 1 April 2030, with turnover not exceeding Rs100 crore in the relevant year and an Inter-Ministerial Board certificate. DPIIT recognition alone does not grant the deduction.

What's the right ESOP pool size for our stage?

Pre-seed and seed: typically 8-12% of fully diluted equity. Series A: usually expanded to 12-15% post-money. The right number depends on your hiring plan, retention targets and existing equity already granted. We model dilution scenarios before you commit.

When should we issue SAFE notes vs convertible notes vs equity?

SAFEs work for very early rounds with friendly investors who'll convert at the next priced round. Convertible notes (CCDs in Indian law) work when you need a debt instrument with conversion mechanics. Equity is right when valuation is defensible and the investor wants ownership now. We help you pick — and draft accordingly.

For Funded Startups

Startup Scale Advisory — Investor-Ready, Compliance-Complete.

DPIIT, ESOPs, cap table, SAFE notes, FC-GPR and valuation requirements — everything an Indian startup needs to close a clean round and keep growing.

Prepare for Your Next Funding Round Back to For Startups

What's Covered

DPIIT Startup India recognition and section 140 tax-holiday eligibility (formerly section 80-IAC)
Cap table structuring and ESOP scheme setup
Shareholder agreement review and investor term-sheet advisory
Due-diligence preparation and data-room setup
Convertible note and SAFE note compliance
ESOP trust or direct option pool structuring
FEMA compliance for foreign investors — FC-GPR filing
Valuations for Companies Act allotments, FEMA pricing and ESOPs

Who This Is For

Scale advisory is for startups about to raise, mid-raise, or recovering from a messy prior round. If you're pre-revenue and pre-product, you don't need us yet.

Pre-seed and seed founders raising Rs1-5Cr

First institutional round on the horizon. You need DPIIT, a defensible cap table, term-sheet review and the basics done right so the round closes without rework.

Series A startups (Rs15-50Cr round)

Legal and financial DD is about to start. You need a data room, three years of clean financials, ESOP scheme in place and every prior FEMA filing reconciled.

Bootstrapped startups going for first external capital

You've been running on revenue and founder equity. Now you need a cap table, ESOPs for the early team and a structure that won't blow up under investor scrutiny.

Startups with foreign investors or co-founders

FC-GPR, FEMA pricing guidelines, valuation reports under Rule 11UA, and Companies Act allotment valuations — all need to be handled before the wire hits your account.

Benefits

What clean scale-stage advisory actually delivers — beyond the standard list of services.

DPIIT and section 140 eligibility

Recognition requires a documented innovation or scalability case under the 2026 rules. The section 140 holiday (formerly section 80-IAC) requires separate company/LLP eligibility and an Inter-Ministerial Board certificate.

Cap table you can defend in DD

A clean cap table with every issuance, transfer, ESOP grant and convertible instrument tracked. Investor diligence stops being a fire drill.

ESOP that actually motivates

Most ESOP schemes are copy-pasted templates that don't match the company's stage or culture. We structure vesting, cliff, strike price and exercise window for your specific situation.

FEMA filings always current

Late FC-GPR filings carry uncapped per-day penalties and trigger RBI compounding. We file within the 30-day window — every round, without exception.

Valuation requirements reviewed

Section 56(2)(viib), commonly called angel tax, was abolished from 1 April 2025 (AY 2025-26 onwards). Valuations remain relevant for Companies Act allotments, FEMA pricing for NRI or foreign investors and ESOPs.

DD-ready in 4-6 weeks

From engaged to data-room-ready: 4-6 weeks for most startups. Investor questions get answered in hours, not weeks — which is often the difference between a closed round and a stalled one.

Our Process

A 5-stage engagement from diagnostic to post-close hygiene. Most startups go from engaged to investor-ready in 4-6 weeks.

1
Diagnostic (Week 1)
We review your incorporation docs, cap table, prior funding rounds, FEMA filings, ESOP scheme (if any) and current financials. Output: a written gap report with priority fixes.
2
Foundation fixes (Weeks 2-3)
Cap table is rebuilt and reconciled. ESOP scheme is drafted or revised. Missing FEMA filings are completed. DPIIT application is filed if not already in place.
3
Data room (Weeks 3-5)
Financial, legal, compliance, contracts and IP folders are populated. Every document is named, dated and version-controlled. Investors get a single shareable link.
4
Round support (during fundraise)
We review term sheets and SHA, model dilution scenarios, attend DD calls with investor counsel, and coordinate FC-GPR or PAS-3 filings post-close.
5
Post-close hygiene (ongoing)
Board resolutions, ROC filings, ESOP grants, quarterly investor reporting and the next round's prep. The cap table never falls out of sync again.

Frequently Asked Questions

Prepare for Your Next Funding Round

30-minute scoping call. We'll review your cap table, DPIIT eligibility and pending FEMA filings.

Book a Scale Consultation Talk to a CA

Scope of services and important information

This page describes services offered by RTA & Associates, Chartered Accountants. It is published for general information and does not constitute tax, legal, financial or investment advice, nor an offer or solicitation to provide services in any jurisdiction where we are not qualified to do so.

Any engagement is governed by a separate written engagement letter, which sets out the scope of work, the deliverables, the fees and the limits of our responsibility. Nothing on this page forms part of that engagement or varies its terms.

Descriptions of timelines, processes, costs and outcomes are indicative and depend on your specific circumstances and on third parties — regulators, exchanges, banks and counterparties — whose timelines we do not control. Statutory and regulatory requirements change; the current position should be confirmed before you act.

We are Chartered Accountants. Where a matter requires legal advice, advice on the law of a country other than India, or a regulated investment recommendation, we will say so and you should take advice from an appropriately qualified and licensed adviser in the relevant field and jurisdiction.