How do I start a business in India with low investment?
Start with something you can sell from your skills or a small stock, as a sole proprietor, and register only what the law asks for at your size. 1) Pick something you can test for little cash, such as a service, reselling or a home food brand, and get paying customers before you spend. 2) Open a current account in the business name and take the free Udyam (MSME) registration: it is paperless, based on self-declaration, and lets you claim interest when a buyer pays you after 45 days. 3) GST registration costs nothing and is needed once turnover crosses Rs 40 lakh for goods or Rs 20 lakh for services (Rs 10 to 20 lakh in special category states), or earlier if you sell goods across states; small sellers can choose the composition scheme. 4) Keep income tax simple: presumptive taxation covers turnover up to Rs 3 crore. 5) For a small loan, a Mudra Shishu loan goes up to Rs 50,000 without collateral. Form a Pvt Ltd only when you raise money or need limited liability.
The government's only portal for registering a micro, small or medium enterprise. It states registration is free and lists the revised limits: a micro enterprise has investment up to ₹2.5 crore and turnover up to ₹10 crore, a small one up to ₹25 crore and ₹100 crore.
GST is the single compliance item a solo founder most often gets wrong, either registering too late or not knowing the threshold differs for goods (40 lakh) versus services (20 lakh). ClearTax is the canonical Indian reference on this: it walks the exact portal steps (TRN, Aadhaar authentication, document upload), the documents you need, and the penalty math for skipping it (minimum 10,000 rupees, up to 100% of tax evaded), so you register at the right moment and not a filing cycle late.
The threshold is not one number: roughly 40 lakh turnover for goods and 20 lakh for services (lower in special-category states), computed on aggregate all-India turnover under one PAN
You often need GST anyway to invoice business clients who want to claim input credit, regardless of your turnover
Skipping registration when required carries a penalty of at least 10,000 rupees or the tax evaded, so treat the threshold as a hard trigger, not a suggestion
The government's own May 2026 summary of startup tax benefits under both Acts: the 80-IAC holiday (section 140 of the Income-tax Act 2025), ESOP tax deferral, and the abolition of angel tax.
80-IAC / section 140: 100% deduction for any 3 consecutive years in the first 10, for a company or LLP incorporated from 1 April 2016 to before 1 April 2030.
Turnover must not exceed Rs 300 crore in the year, and you need the IMB certificate.
The four MUDRA loan bands for a micro business, given through banks and NBFCs: Shishu up to Rs 50,000, Kishore up to Rs 5 lakh, Tarun up to Rs 10 lakh and Tarun Plus up to Rs 20 lakh.
This is the number your bid price has to survive. It works a concrete case (a Rs 5,00,000 invoice carries Rs 90,000 GST you remit before the buyer pays you), which is exactly the government-contract trap: you fund the tax on money you have not collected for 90 to 120 days. It also spells out the MSMED Act 45-day rule, the automatic interest at 3x the RBI bank rate compounded monthly, and the Samadhaan route, so you can price working-capital cost in instead of discovering it two years into a contract.
You remit GST (Rs 90,000 on a Rs 5,00,000 invoice) before the buyer pays, so cost the tax-funding gap into your bid margin
MSMED Act caps payment at 45 days and auto-charges interest at 3x RBI bank rate compounded monthly, overriding any longer contract terms
MSME Samadhaan and the Facilitation Council (roughly 90-day resolution, 75% pre-deposit to appeal) are your recovery levers on a delayed government payment
A candid founder conversation on building India's largest brokerage entirely on customer money, with no external capital. The clearest India-specific case study on the trade-offs of bootstrapping vs raising.
