Startup Compliance Checklist in India (Guide for Founders)

Starting a business in India is not just an incorporation exercise. From the day your company is registered, a series of legal, tax, and regulatory obligations begin, under the Companies Act, Income-tax Act, GST law, FEMA, and applicable labour laws.

Most founders discover compliance gaps at the worst possible time: during investor due diligence, during a tax assessment, or when an ROC notice arrives. At Nine O Six Advisory, we work with founders across stages, and the pattern is consistent, the problems were always preventable, and always cheaper to fix early.

This startup compliance checklist for India covers every stage: pre-incorporation, post-incorporation, ongoing filings, annual compliance, and event-based triggers. Use it as a reference before you start, and as a review tool as you scale.

1. Pre-Incorporation Compliance

Before you register, get the foundation right. These decisions affect your structure for years.

Choose the correct business entity. For startups seeking funding, a Private Limited Company under the Companies Act, 2013 is the standard, it permits equity issuance, ESOP schemes, and FEMA compliance for foreign investment. An LLP or OPC may work for certain business models but is not aligned with VC or angel investment frameworks.

Obtain a Digital Signature Certificate (DSC) and Director Identification Number (DIN) for all proposed directors. File for name approval through the RUN or SPICe+ process on the MCA portal. Draft the Memorandum of Association (MoA) and Articles of Association (AoA) carefully, the AoA in particular governs share transfer, voting rights, and investor protections, and a poorly drafted AoA creates problems at every subsequent funding round.

Define your initial shareholding structure before incorporation. Informal understandings between co-founders that are never documented formally become disputes later.

2. Post-Incorporation Compliance

This is the most commonly missed stage. Founders incorporate and assume the compliance work is done. It is not.

Within the first 30 days, appoint a statutory auditor and file Form ADT-1 with the ROC. Open a company bank account immediately, all financial transactions of the company must flow through it from day one.

Within 60 days, issue share certificates to all shareholders. This is a mandatory requirement under the Companies Act, not an administrative formality.

Within 180 days of incorporation, file Form INC-20A, the Declaration of Commencement of Business. This is the single most commonly missed post-incorporation filing. Non-filing attracts a penalty of up to ₹50,000, and the ROC has the power to initiate strike-off proceedings against companies that have not filed it.

Activate PAN and TAN immediately. All future tax deductions and filings depend on these.

3. Tax Registration Compliance

Depending on your business model, the following registrations apply.

GST registration is mandatory if annual turnover exceeds ₹40 lakh for goods or ₹20 lakh for services, if you are engaged in inter-state supply, or if you operate through an e-commerce platform. Many early-stage founders in the B2B or SaaS space cross the threshold faster than they expect, and retrospective GST registration is far more painful than proactive registration.

Beyond GST, consider Professional Tax registration (state-specific), Shops and Establishment License, and Import Export Code (IEC) if you are exporting services or goods. Startup India registration with DPIIT is optional but opens access to meaningful benefits, covered in a later section.

4. Monthly and Quarterly Compliance

Once operational, ongoing compliance is non-negotiable.

On the GST front: GSTR-1 (outward supplies) is filed monthly or quarterly depending on your turnover, and GSTR-3B (summary return with tax payment) is filed monthly. The annual GST return GSTR-9 is filed once a year.

On the TDS front: tax must be deducted at source on applicable payments: salaries, contractor fees, rent, professional charges, deposited monthly, and quarterly returns filed in Form 24Q (salary) and Form 26Q (non-salary). Delayed TDS deposits attract interest at 1% to 1.5% per month, and the penalty provisions under Section 271C are significant.

If you have employees, PF and ESIC contributions must be deposited monthly where applicable thresholds are crossed.

We recommend building a monthly compliance calendar from day one, not waiting until the filing due date to identify what is required.

5. Annual Compliance for Private Limited Companies

Every private limited company must complete these filings annually, regardless of revenue or activity.

Under the Companies Act, Form AOC-4 (financial statements) must be filed within 30 days of the AGM, and Form MGT-7 (annual return) within 60 days of the AGM. The company must hold a minimum of four board meetings per year and one AGM annually.

Under the Income-tax Act, ITR-6 is the applicable return form for companies. If turnover exceeds the threshold under Section 44AB, a tax audit is mandatory. Advance tax must be paid in instalments if the estimated tax liability exceeds ₹10,000 for the year.

Delayed ROC filings attract penalties at ₹100 per day with no cap in many cases. For a company that has missed a few years of filings, the accumulated penalty can be substantial and the directors face personal liability.

6. Event-Based Compliance

Event-based filings are where most startup compliance failures occur. These are triggered by specific corporate actions, and unlike routine filings, there is no fixed calendar reminder, the obligation arises from the event itself.

When shares are allotted, Form PAS-3 must be filed within 15 days. When a director is appointed or resigns, Form DIR-12 must be filed within 30 days. A change in registered office requires Form INC-22. An increase in authorised share capital requires Form SH-7. Loans between related parties are governed by Sections 185 and 186 of the Companies Act and carry specific compliance requirements.

The pattern we see most often: a startup completes a funding round, allots shares to investors, and forgets to file PAS-3. Six months later, when a larger investor runs diligence, the non-filing surfaces and the entire cap table is questioned.

7. FEMA Compliance for Foreign Investment

If your startup receives investment from an NRI, foreign national, or foreign entity, FEMA compliance is mandatory.

Form FC-GPR must be filed on the RBI FIRMS portal within 30 days of allotment of shares. Pricing must comply with FEMA valuation norms. All remittances must come through proper banking channels with complete KYC documentation.

Delayed FC-GPR filing is a compoundable offence under FEMA. We have seen companies pay more in compounding fees and legal costs than the administrative effort of filing on time would have required. Build FEMA filing into your deal timeline from the term sheet stage, not as an afterthought after the money hits the bank.

8. DPIIT Recognition and Startup India Benefits

DPIIT recognition is not mandatory, but for eligible startups, the benefits are material.

Recognised startups can apply for income tax exemption under Section 80-IAC (three consecutive years out of ten), access faster IP processing with rebated fees, and benefit from self-certification under certain labour laws.

Important update for 2025-26: Section 56(2)(viib), the Angel Tax provision, was abolished by the Finance Act, 2024 with effect from April 1, 2024 for all classes of investors, domestic and foreign. The angel tax exemption previously linked to DPIIT recognition is no longer the primary reason to seek recognition, but the Section 80-IAC and IP benefits remain relevant.

Eligibility conditions: the entity must be incorporated as a Pvt Ltd, LLP, or registered partnership firm; turnover must not have exceeded ₹100 crore in any previous year; and the business must be working towards innovation, improvement, or scalability.

9. Common Compliance Mistakes We See

Not filing INC-20A within 180 days of incorporation is the single most common early-stage error. Ignoring GST applicability for online or subscription-based businesses is the second. Delayed TDS deposits, often because founders do not realise TDS applies to contractor payments, consistently result in avoidable interest and penalty. Improper share allotment documentation, particularly PAS-3 non-filing, causes the most damage at the funding stage. And the absence of any proper accounting system in the first year makes everything harder and more expensive to fix later.

10. Penalties at a Glance

GST late fee: ₹50 per day per return. TDS interest: 1% to 1.5% per month on delayed deposits. ROC penalties: ₹100 per day with no ceiling in many provisions. Director disqualification under Section 164 for companies that fail to file annual returns for three consecutive years. Strike-off proceedings for companies dormant or non-compliant over an extended period.

These numbers are not theoretical. We see them applied in practice, and the compounding effect of multiple missed filings over two to three years can create a penalty burden that is disproportionate to the original oversight.

Practical Recommendations

Maintain books of accounts from day one, not from the first audit. Use compliance tracking software or maintain a structured calendar. Conduct a quarterly internal compliance review covering GST, TDS, and ROC obligations. Work with a CA who specialises in startup compliance, not just tax filing.

The cost of structured compliance from the start is a fraction of the cost of rectification later.

FAQs on Startup Compliance in India

What is the most important compliance for a newly incorporated startup in India? 
Form INC-20A is required to be filed by all companies having share capital (private or public) incorporated on or after 2 November 2018, under Section 10A of the Companies Act, 2013. The form can be filed only after the company has received subscription money from its shareholders and must be filed within 180 days of incorporation.

Is GST registration mandatory for all startups? 
Not immediately. GST registration is mandatory when turnover crosses ₹40 lakh (goods) or ₹20 lakh (services), or when the startup is engaged in inter-state supply or e-commerce operations regardless of turnover.

What annual ROC filings does a private limited company need to complete? 
Form AOC-4 (financial statements, within 30 days of AGM) and Form MGT-7 (annual return, within 60 days of AGM) are mandatory every year for all private limited companies.

What happens if a startup misses ROC filings? 
Penalties accrue at ₹100 per day per default. Directors face disqualification under Section 164 if annual returns are not filed for three consecutive years. Prolonged non-compliance can result in strike-off.

Is DPIIT recognition mandatory for startups? 
No. It is optional but beneficial, primarily for the Section 80-IAC income tax exemption and subsidised IP processing. Note that angel tax under Section 56(2)(viib) was abolished from April 1, 2024 and is no longer a reason to seek DPIIT recognition.

What is FC-GPR and when does a startup need to file it? 
FC-GPR (Foreign Currency – Gross Provisional Return) is a mandatory RBI filing on the FIRMS portal, required within 30 days of allotment when a startup receives foreign investment. Delayed filing is a compoundable offence under FEMA.

When does a startup need a statutory audit? 
Every private limited company must have its accounts audited annually by a Chartered Accountant, regardless of turnover. A tax audit under Section 44AB is additionally required if turnover crosses the prescribed threshold.

Startup compliance in India is not optional. It is foundational to survival, fundability, and long-term credibility.

A compliant startup attracts investors faster, avoids legal disputes, and builds on solid ground. A non-compliant one faces penalties, funding delays, and risks that compound quietly until they cannot be ignored.

Get it right from day one. Stay structured as you grow.

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