How the government is killing Indian Startups

Here are some pain points you'll really feel if you're trying to do a micro-ISV.

I) Incorporation:

- No way for one individual to have limited liability. Sole Proprietorship only.

- A 'Private Limited' will cost you INR 20K-40K (USD 400-800), requires at least 2 people and quarterly board meeting filings.

- Private Limited minimum capital is INR 100K (USD 2K). Registration cost goes up if you invest more capital.

- Bank account pain: minimum balance INR 40K (USD 800), set up can take months to be fully functional.

II) Taxes:

- VAT registration & monthly filing.

- Service tax registration & quarterly filing.

- Import Export registration if you're exporting software.

- It's not clear if software is a product or service. So you'll do what everyone does - charge users both VAT & service tax!

- Since amazon, rackspace etc dont charge you Indian service tax, you'll have to pay it. Add 20% to your SaaS hosting costs.

- If you hire contractors, you have to withhold & submit their service tax.

BTW, from what I've read here and in other forums, stuff like this is a pain in many countries.