How to start a SaaS startup in India: registrations and licences

Why a private limited company is the default for SaaS

SaaS businesses raise money in rounds, issue ESOPs and often take foreign investment. A private limited company supports equity rounds, convertible notes and ESOP pools, and foreign venture funds are familiar with it. Indian law allows 100% foreign investment in software businesses under the automatic route, subject to pricing and reporting rules.

An LLP is cheaper to run but cannot issue ESOPs, and many investors will not invest in one. A one person company suits a solo founder only until the first co-founder or investor joins, at which point conversion is needed.

Registrations a SaaS startup needs

There is no SaaS-specific licence in India. The list is mostly corporate and tax registrations, plus local and labour registrations for your office, and each one is in the company's name rather than the founders'.

How GST applies to SaaS revenue

Subscriptions sold to Indian customers carry 18% GST. Sales to overseas customers qualify as export of services when the supplier is in India, the customer is outside India, the place of supply is outside India, payment comes in convertible foreign exchange or in rupees where RBI permits, and the two parties are not merely branches of the same entity.

Exports are zero-rated: file a Letter of Undertaking at the start of each financial year and invoice without IGST, or pay IGST and claim a refund. Tools you buy from overseas vendors, such as cloud hosting or software, are imports of services; a registered business pays IGST on them under reverse charge and can usually claim it back as credit.

Startup recognition, funding and income tax

Under G.S.R. 108(E) of February 2026, an entity counts as a startup for DPIIT purposes if it is within 10 years of incorporation and turnover has never exceeded ₹200 crore, among other conditions; deep-tech startups get longer limits. Recognition helps with government schemes and self-certification under certain laws.

A separate certificate from the inter-ministerial board is needed for the startup tax holiday. Angel tax on share premium was abolished from financial year 2024-25. When you allot shares to a foreign investor, file Form FC-GPR with RBI through the FIRMS portal within 30 days of allotment, and follow the pricing guidelines under FEMA.

Ongoing compliance for SaaS companies

Company law filings include the first auditor appointment within 30 days of incorporation, the commencement of business declaration, board meetings, the AGM, and annual filing of financial statements and the annual return. Directors file DIR-3 KYC once every three financial years by 30 June, and update details within 30 days of any change.

Data protection now matters. The DPDP Rules 2025 were notified in November 2025, and most operational duties, including notices, security safeguards, breach reporting and children's data rules, apply from 13 May 2027. Enterprise customers will ask for this in contracts well before then.

Mistakes SaaS founders make

Each of these is fixable, but late fees, interest and investor due diligence questions make it cheaper to set things up correctly in the first year.

• Invoicing overseas customers with IGST because no LUT was filed for the year.
• Founders holding IP personally instead of assigning code and trademarks to the company.
• Issuing shares to foreign investors without timely FC-GPR reporting.
• Ignoring reverse charge GST on overseas software and cloud bills.

Step by step

1. 1Incorporate the company

   Register a private limited company with PAN and TAN through SPICe+.

2. 2Assign IP

   Have founders assign code, domains and trademarks to the company by written agreement.

3. 3Register for GST

   Register and file the LUT if you will bill overseas customers.

4. 4Local registrations

   Obtain shop and establishment and professional tax registrations for your office.

5. 5Apply for DPIIT recognition

   Apply on Startup India once the company qualifies.

6. 6Set up contracts and policies

   Terms of service, privacy notice and data processing terms.

7. 7Build the compliance calendar

   GST returns, TDS, ROC filings, DIR-3 KYC and income-tax deadlines.