Author: Financial Analyst

What Is TDS on Property?

TDS on property refers to tax deducted at source by the buyer at the time of purchasing immovable property (excluding agricultural land).
It is applicable under Section 194-IA of the Income Tax Act.

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When Is TDS on Property Applicable?

TDS must be deducted when:

• Property value exceeds ₹50 lakh
• Buyer is a resident of India
• Seller is a resident Indian
• Transaction involves land, building, or both

TDS is not applicable on agricultural land.

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Rate of TDS on Property

Particulars	Rate
TDS Rate	1%
Deduction Time	At payment or credit, whichever is earlier
PAN Not Provided	20%

TDS is calculated on the total sale consideration, not just the excess over ₹50 lakh.

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Step-by-Step Process of TDS on Property

Step 1: Verify Property Value and Applicability

Confirm:

• Sale value exceeds ₹50 lakh
• Seller is resident Indian
• Property is not agricultural land

Only then does Section 194-IA apply.

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Step 2: Collect Seller’s PAN

Ensure seller’s:

• Correct PAN is available
• PAN matches Income Tax records

Incorrect PAN leads to higher TDS and errors.

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Step 3: Calculate TDS Amount

Compute:

• TDS = 1% × Sale Consideration

Example:
If property value is ₹80 lakh → TDS = ₹80,000

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Step 4: Deduct TDS at Time of Payment

Deduct TDS:

• At the time of making payment
• On each installment, if payment is in parts

Buyer must deduct before releasing full payment.

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Step 5: File Form 26QB Online

File Form 26QB (challan-cum-statement) on the Income Tax portal by providing:

• Buyer and seller details
• PAN of both parties
• Property details
• Sale consideration and TDS amount

No TAN is required for this filing.

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Step 6: Pay TDS Amount

Pay the TDS online using:

• Net banking
• Debit card

Payment is linked directly with Form 26QB.

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Step 7: Download TDS Certificate (Form 16B)

After payment:

• Download Form 16B from TRACES
• Issue Form 16B to seller within 15 days

This acts as proof of TDS deduction.

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Due Date for TDS on Property

• Form 26QB must be filed within 30 days from the end of the month in which TDS is deducted
• Form 16B must be issued within 15 days from due date of Form 26QB

Late filing attracts interest and penalty.

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Penalty and Interest for Non-Compliance

Default	Consequence
Late deduction	Interest @ 1% per month
Late payment	Interest @ 1.5% per month
Late filing	Fee ₹200 per day (max TDS amount)

Compliance on time avoids heavy costs.

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Common Mistakes to Avoid

• Not deducting TDS on installments
• Incorrect PAN entry
• Delay in filing Form 26QB
• Forgetting to issue Form 16B

Professional handling reduces errors.

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Conclusion

TDS on property is a buyer’s responsibility and applies even to individuals who are otherwise not tax filers. Following the correct step-by-step process ensures smooth property registration, avoids penalties, and keeps the transaction fully compliant under income tax laws.

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Disclaimer

This article is for informational purposes only and does not constitute legal, tax, or professional advice. TDS provisions, rates, and procedures are subject to change as per applicable laws and notifications. Readers are advised to consult qualified professionals before making any tax or property-related decisions.

What Is a Trademark?

A trademark protects:

• Brand name
• Logo
• Tagline
• Symbol or design

It distinguishes your goods or services from competitors.

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Step 1: Trademark Search

Conduct a public search to ensure:

• No identical or similar trademark exists
• Correct trademark class is identified

This reduces rejection risk.

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Step 2: Select Trademark Class

Trademarks are categorized under 45 classes:

• Classes 1–34: Goods
• Classes 35–45: Services

Correct classification is crucial.

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Step 3: Prepare Application

Prepare:

• Applicant details
• Trademark logo (if applicable)
• Description of goods/services
• Usage date (used or proposed to be used)

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Step 4: File Trademark Application

File the application online with:

• Government filing fee
• Digital signature or Aadhaar-based verification

Application number is generated instantly.

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Step 5: Examination by Trademark Office

The Trademark Registry:

• Examines legal and technical compliance
• Issues examination report (if objections exist)

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Step 6: Reply to Objections

If objections are raised:

• Submit written reply within deadline
• Attend hearing if required

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Step 7: Publication & Registration

If accepted:

• Trademark is published in the Journal
• If no opposition is filed, registration certificate is issued

Trademark validity: 10 years, renewable indefinitely.

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Part B: Patent Registration – Step-by-Step Process

What Is a Patent?

A patent protects:

• New inventions
• Products or processes
• Technical solutions

Patent protection grants exclusive commercial rights.

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Step 1: Patentability Assessment

Check whether the invention is:

• Novel
• Involves inventive step
• Industrially applicable

Non-patentable inventions are excluded by law.

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Step 2: Prior Art Search

Conduct a patent search to:

• Identify existing similar inventions
• Assess uniqueness

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Step 3: Draft Patent Specification

Prepare:

• Provisional specification (optional)
• Complete specification with claims, drawings, and abstract

Professional drafting is critical.

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Step 4: File Patent Application

Submit application online with:

• Applicant and inventor details
• Government fees
• Specification documents

Application number and filing date are allotted.

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Step 5: Publication of Application

Patent application is published:

• After 18 months (or early publication request)

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Step 6: Request for Examination

File Request for Examination (RFE) to initiate review.

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Step 7: Examination & Response

Patent Office:

• Issues examination report
• Applicant responds to objections
• Hearings may be conducted

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Step 8: Grant of Patent

If objections are resolved:

• Patent is granted and published
• Validity: 20 years from filing date

Annual renewal fees apply.

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Key Benefits of Trademark & Patent Registration

• Legal ownership and protection
• Brand and innovation security
• Commercial licensing opportunities
• Enhanced valuation and credibility
• Protection against infringement

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Common Mistakes to Avoid

• Skipping trademark or patent search
• Incorrect class selection
• Poorly drafted patent claims
• Missing deadlines or renewals

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Conclusion

Trademark and Patent registrations are strategic assets for businesses aiming for long-term growth and innovation protection. While trademarks secure brand identity, patents safeguard technical inventions. A structured, compliant approach ensures faster approval and enforceable rights.

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Disclaimer

This article is for informational purposes only and does not constitute legal or professional advice. Trademark and patent registration processes, eligibility, timelines, and approvals are subject to applicable laws and government discretion. Readers are advised to consult qualified IP professionals before filing or relying on any intellectual property registration.

What Is Tax Exemption?

Tax exemption refers to legal relief from paying income tax on specified income, activities, or entities as allowed under the Income Tax Act, 1961. Common tax exemptions include:

• Startup tax exemption
• NGO and trust tax exemption
• Section-based exemptions (such as 10, 11, 12, 80)

Each exemption requires separate application and approval.

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Who Can Apply for Tax Exemption?

Tax exemption can be applied by:

• DPIIT-recognized startups
• Trusts and societies
• Section 8 companies
• Charitable and religious institutions
• Educational and medical institutions

Eligibility depends on the specific section under which exemption is claimed.

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Step-by-Step Process to Apply for Tax Exemption

Step 1: Identify Applicable Tax Exemption

Determine the correct exemption category based on:

• Nature of entity
• Purpose and activities
• Applicable section of Income Tax Act

Choosing the wrong section may lead to rejection.

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Step 2: Ensure Eligibility Conditions

Before applying, confirm:

• Proper incorporation or registration
• No prohibited commercial activity (if applicable)
• Compliance with turnover or age limits
• Valid registrations (PAN, GST if applicable)

Eligibility must be met before application.

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Step 3: Prepare Mandatory Documents

Commonly required documents include:

• PAN of entity
• Certificate of incorporation or registration
• Founding documents (MOA, trust deed, bye-laws)
• Financial statements and projections
• Activity note and objectives
• Bank account details

Document accuracy is critical.

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Step 4: Register on Income Tax Portal

Log in to the Income Tax e-filing portal using:

• Entity PAN
• Authorized signatory credentials
• Valid DSC or Aadhaar-based verification

All exemption applications are filed online.

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Step 5: File Online Application Form

Submit the relevant online form as applicable:

• Enter entity details and activity description
• Upload supporting documents
• Verify application digitally

Forms differ based on exemption type.

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Step 6: Respond to Queries or Notices

The Income Tax Department may:

• Seek clarification or additional documents
• Issue online notices

Timely response ensures faster approval.

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Step 7: Approval or Rejection Order

Upon review:

• Tax exemption approval is issued digitally
• Approval certificate/order is downloadable
• Rejection is communicated with reasons

Approval timelines vary by case.

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Post-Approval Compliance Requirements

After receiving tax exemption:

• File annual Income Tax Returns on time
• Maintain books of accounts
• Use funds strictly for approved purposes
• File audit reports if applicable

Non-compliance may lead to cancellation.

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Benefits of Applying for Tax Exemption

• Significant tax savings
• Improved cash flow
• Increased credibility with donors and investors
• Legal compliance and peace of mind

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Common Reasons for Rejection

• Incomplete or incorrect documentation
• Activities not matching stated objectives
• Non-compliance history
• Late or improper responses to notices

Professional review reduces rejection risk.

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Conclusion

Applying for tax exemption is a strategic and compliance-driven process that offers long-term financial benefits when done correctly. Whether you are a startup or a nonprofit entity, understanding eligibility, documentation, and post-approval responsibilities is essential to retain exemption benefits and avoid penalties.

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Disclaimer

This article is for informational purposes only and does not constitute legal, tax, or professional advice. Tax exemption eligibility, procedures, and approvals are subject to applicable laws, rules, and departmental discretion. Readers are advised to consult qualified professionals before applying for or relying on any tax exemption.

What Is GeM Portal?

GeM (Government e-Marketplace) is a one-stop digital platform where:

• Government departments buy goods and services
• Registered sellers list and sell their offerings
• Procurement happens transparently and digitally

Both manufacturers and service providers can register on GeM.

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Who Can Register on GeM Portal?

The following entities are eligible:

• Proprietorship firms
• Partnership firms
• LLPs
• Private Limited Companies
• Public Limited Companies
• Trusts and Societies (for eligible services)

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Step-by-Step Process for GeM Portal Registration

Step 1: Prepare Required Information

Keep the following ready:

• PAN of business and proprietor/directors
• Aadhaar linked with mobile number
• Active email ID and mobile number
• Bank account details
• GST registration details (if applicable)

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Step 2: Visit GeM Portal and Create Seller Account

Register on the GeM portal using:

• Aadhaar-based OTP authentication
• PAN verification
• Business details entry

The Aadhaar holder becomes the Primary User.

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Step 3: Enter Business and Organization Details

Provide:

• Legal name of business
• Type of organization
• Registered address
• Date of incorporation
• MSME/Udyam details (if applicable)

Ensure consistency with official records.

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Step 4: Upload Mandatory Documents

Upload required documents such as:

• PAN card
• GST registration certificate (if applicable)
• Bank account proof (cancelled cheque)
• Address proof

Document verification is system-driven.

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Step 5: Add Product or Service Categories

After account activation:

• Select relevant product or service categories
• Map offerings to GeM-approved categories
• Provide technical specifications and pricing

Only approved categories can be listed.

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Step 6: Brand & OEM Validation (If Applicable)

For manufacturers:

• Brand and OEM authorization is required
• Upload brand ownership or authorization documents

This step enables listing under own brand.

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Step 7: Account Verification and Activation

GeM performs:

• Aadhaar and PAN validation
• Bank account verification
• GSTIN validation (where applicable)

Once approved, seller account becomes active.

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Benefits of GeM Portal Registration

• Direct access to government buyers
• No middlemen or commission
• Transparent pricing and bidding
• Timely payments through GeM
• Increased credibility and visibility

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Post-Registration Compliance on GeM

Registered sellers must:

• Update product pricing and specifications regularly
• Comply with order fulfillment timelines
• Maintain quality standards
• Respond to bids and buyer queries

Non-compliance may lead to suspension.

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Common Issues Faced During Registration

• Aadhaar not linked with mobile
• Mismatch in PAN or GST details
• Incorrect business classification
• Incomplete product specifications

Professional assistance helps avoid delays.

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Conclusion

GeM Portal Registration is a powerful opportunity for businesses to expand into government procurement with transparency and ease. With correct documentation and proper category selection, sellers can unlock large-volume orders and long-term growth through the GeM ecosystem.

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Disclaimer

This article is for informational purposes only and does not constitute legal, tax, or professional advice. GeM portal rules, eligibility, and processes are subject to change as per government guidelines. Readers are advised to consult qualified professionals before registering or listing on the GeM portal.

What Is DPIIT Startup Recognition?

DPIIT Startup Recognition is an official government recognition provided to startups that:

• Are innovation-driven
• Aim to create employment or wealth
• Are incorporated as a Private Limited Company, LLP, or Partnership Firm

Once approved, the startup receives a Startup Recognition Certificate.

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Eligibility Criteria for DPIIT Startup Recognition

To qualify, a startup must meet all the following conditions:

• Incorporated in India (Pvt Ltd, LLP, or Partnership)
• Not older than 10 years from incorporation
• Annual turnover not exceeding ₹100 crore in any financial year
• Working towards innovation, improvement, or scalability
• Not formed by splitting or reconstructing an existing business

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Step-by-Step Process for Startup Recognition under DPIIT

Step 1: Incorporate the Startup

Ensure your business is incorporated as:

• Private Limited Company
• Limited Liability Partnership (LLP)
• Registered Partnership Firm

Valid incorporation documents are mandatory.

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Step 2: Register on Startup India Portal

Create an account on the Startup India portal using:

• Founder’s name and email ID
• Mobile number (OTP verification)

This account will be used for all future filings.

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Step 3: Fill DPIIT Recognition Application

Log in and complete the Startup Recognition form by providing:

• Entity name and incorporation details
• PAN and registered address
• Industry and sector classification
• Details of directors/partners

Accuracy is critical to avoid rejection.

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Step 4: Upload Mandatory Documents

Upload the following documents:

• Certificate of Incorporation or Registration
• PAN of the entity
• Brief write-up on innovation or scalability
• Details of funding (if any)

The innovation write-up is a key evaluation factor.

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Step 5: Self-Certification and Declaration

The startup must self-certify that:

• It meets DPIIT eligibility conditions
• Information provided is true and correct
• It is not formed by business restructuring

False declarations may lead to cancellation.

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Step 6: Submit Application

After verification:

• Submit the application online
• No government fee is charged
• A recognition number is generated instantly

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Step 7: DPIIT Examination and Approval

DPIIT reviews the application and documents.
If satisfied:

• Startup Recognition Certificate is issued digitally
• Certificate can be downloaded from the portal

Approval timelines may vary.

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Benefits of DPIIT Startup Recognition

1. Income Tax Exemption

Eligible startups can apply for 3-year income tax exemption under Section 80-IAC (subject to approval).

2. Angel Tax Exemption

Exemption from angel tax under Section 56(2)(viib), subject to conditions.

3. Government Funding & Schemes

Access to:

• Startup India Seed Fund
• Government tenders with relaxed criteria
• Credit guarantee schemes

4. Ease of Compliance

• Self-certification under labor laws
• Relaxation under environmental laws
• Faster IP registrations with rebates

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Post-Recognition Compliance

After DPIIT recognition, startups must:

• Maintain annual filings (ITR, ROC, GST if applicable)
• Update portal details if business changes
• Apply separately for tax exemptions when eligible

Recognition does not replace statutory compliance.

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Common Reasons for Rejection

• Weak or unclear innovation description
• Incorrect incorporation details
• Ineligible business activity
• False declarations

Professional review improves approval chances.

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Conclusion

Startup Recognition under DPIIT is a foundation step for startups aiming to leverage India’s startup ecosystem. With proper documentation and a strong innovation narrative, recognition can unlock tax savings, funding access, and compliance benefits. A structured approach ensures smooth approval and long-term compliance.

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Disclaimer

This article is intended for informational purposes only and does not constitute legal, tax, or professional advice. Startup recognition, benefits, and tax exemptions are subject to applicable laws, rules, and government approvals. Readers are advised to consult qualified professionals before taking any action.

Introduction

Venture Debt is an increasingly popular financing option for startups that want to raise capital without significant equity dilution. It is typically taken alongside or after equity funding and is offered by specialized venture debt funds and NBFCs. For Indian startups, venture debt helps extend runway, fund growth, manage working capital, and finance capital expenditure.

This guide explains the step-by-step process of raising venture debt, eligibility, documentation, costs, benefits, risks, and compliance requirements in a clear and practical manner.

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What Is Venture Debt?

Venture Debt is a structured loan provided to venture-backed startups. Unlike traditional bank loans, it relies more on:

• Startup’s equity investors
• Business traction and growth
• Future fundraising capability

It usually includes:

• Term loan or working capital facility
• Warrants or small equity upside (optional)
• Fixed tenure and interest

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Who Should Opt for Venture Debt?

Venture Debt is suitable if your startup:

• Has raised Seed, Series A, or Series B funding
• Has predictable revenues or strong growth metrics
• Wants to avoid equity dilution
• Needs capital for expansion, hiring, marketing, or CAPEX

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Step-by-Step Process for Venture Debt

Step 1: Assess Funding Requirement

Determine:

• Exact capital requirement
• Purpose (growth, runway extension, asset purchase)
• Preferred tenure and repayment capacity

Prepare a use-of-funds plan to justify the loan.

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Step 2: Check Eligibility

Most venture debt providers evaluate:

• Prior equity funding from reputed VCs/angels
• Revenue traction or strong unit economics
• Promoter credibility and governance
• Business scalability and industry outlook

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Step 3: Prepare Key Documents

Commonly required documents include:

• Certificate of Incorporation
• Shareholding pattern and cap table
• Pitch deck and business plan
• Financial statements and projections
• Term sheets of previous equity rounds
• Bank statements
• KYC of founders and directors

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Step 4: Approach Venture Debt Lenders

You may approach:

• Venture debt funds
• NBFCs focused on startups
• Banks with startup-focused products

Applications can be made directly or via advisors to improve negotiation outcomes.

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Step 5: Term Sheet Discussion

Key terms negotiated at this stage:

• Loan amount
• Interest rate
• Tenure and moratorium
• Warrants or equity kicker (if any)
• Security or charge on assets
• Covenants and reporting obligations

Careful review is critical before acceptance.

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Step 6: Due Diligence

The lender conducts:

• Financial due diligence
• Legal and compliance checks
• Review of investor agreements
• Verification of statutory filings

This phase ensures risk assessment before disbursal.

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Step 7: Legal Documentation

Execution of agreements such as:

• Loan agreement
• Security documents
• Warrant agreements (if applicable)
• Board and shareholder resolutions

All documents must comply with applicable laws.

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Step 8: Disbursement of Funds

Once documentation is completed:

• Funds are disbursed in one or multiple tranches
• Conditions precedent must be fulfilled
• Funds are credited to the company account

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Step 9: Post-Disbursement Compliance

After receiving venture debt:

• Maintain periodic financial reporting
• Adhere to covenants
• Make timely EMI payments
• Update ROC filings if required

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Key Benefits of Venture Debt

• Minimal equity dilution
• Faster access to capital
• Improves return on equity
• Extends cash runway
• Flexible repayment structures

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Risks and Considerations

• Fixed repayment obligation
• Higher interest compared to bank loans
• Warrants may dilute equity slightly
• Strict covenants may apply

Proper cash flow planning is essential.

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Tax and Accounting Treatment

• Interest paid is generally tax-deductible
• Warrants may have valuation and tax implications
• Proper accounting under applicable standards is required

Professional advice is recommended.

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Venture Debt vs Equity Funding

Parameter	Venture Debt	Equity Funding
Ownership Dilution	Low	High
Cost	Interest-based	Ownership-based
Control	Retained	Shared
Repayment	Mandatory	Not required
Speed	Faster	Slower

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Conclusion

Venture debt is a powerful financing tool for startups looking to scale efficiently while preserving ownership. When structured correctly, it complements equity funding and strengthens financial flexibility. However, it must be used with disciplined cash flow management and clear growth objectives.

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Disclaimer

This article is for informational purposes only and does not constitute financial, legal, or investment advice. Venture debt terms, eligibility, and regulations may vary based on lender policies and applicable laws. Readers are advised to consult qualified professionals before making any funding or financial decisions.

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Introduction

Venture Capital (VC) funding is designed for startups with high-growth potential aiming to scale rapidly. Unlike early funding sources, venture capital brings large capital, strategic direction, governance, and global networks. However, VC funding also involves deeper scrutiny, structured processes, and long-term commitments.

This Saving Mantra guide explains a clear, practical, and investor-ready step by step process to raise venture capital successfully and sustainably.

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Step 1: Understand What Venture Capital Is

Venture capital funding involves:

• Investment by professional VC firms
• Equity dilution in exchange for growth capital
• Focus on scalability and exits
• Active investor involvement in strategy and governance

VCs invest in businesses that can grow exponentially.

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Step 2: Check If Your Startup Is VC-Ready

VCs typically look for:

• Strong product-market fit
• Rapid and scalable growth potential
• Large addressable market
• Clear competitive advantage
• Strong founding and leadership team
• Clean compliance and governance

Not every startup is suitable for VC funding.

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Step 3: Decide the VC Funding Stage

Common VC funding stages include:

• Pre-Series A
• Series A
• Series B
• Series C and beyond

Each stage has different expectations for traction, revenue, and scale.

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Step 4: Define Funding Amount & Growth Milestones

Before approaching VCs, clearly define:

• Capital required
• 18–24 months runway
• Specific growth milestones
• Use of funds (expansion, hiring, tech, marketing)

VCs fund growth plans, not vague ideas.

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Step 5: Prepare a VC-Grade Pitch Deck

A VC pitch deck should include:

• Problem and scalable solution
• Market size and expansion opportunity
• Product and technology advantage
• Traction and growth metrics
• Revenue model and unit economics
• Competitive landscape
• Team and execution strength
• VC funding ask and roadmap

Data-driven storytelling is critical.

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Step 6: Build Strong Financials & Metrics

VCs focus on:

• Revenue growth rate
• Unit economics
• Customer acquisition cost (CAC)
• Lifetime value (LTV)
• Burn rate and runway
• Gross margins

Strong metrics drive valuation.

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Step 7: Shortlist the Right VC Firms

Do not approach every VC.

Shortlist based on:

• Sector focus
• Investment stage
• Average ticket size
• Portfolio alignment
• Value addition capability

Right VC fit improves long-term outcomes.

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Step 8: Pitch, Engage & Manage VC Discussions

During VC meetings:

• Be precise and confident
• Answer with data
• Acknowledge risks openly
• Show leadership and vision

VCs back founders who can execute at scale.

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Step 9: Negotiate VC Term Sheet

Key VC term sheet elements include:

• Valuation and dilution
• Board representation
• Liquidation preference
• Anti-dilution clauses
• Exit rights and timelines

Negotiation here defines future control and returns.

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Step 10: Undergo VC Due Diligence

VC due diligence typically covers:

• Legal and compliance review
• Financial and tax review
• Technology and IP
• Business operations
• Founder background checks

Preparation speeds up closure.

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Step 11: Execute Legal Agreements

VC funding involves:

• Term sheet
• Share subscription agreement
• Shareholders agreement
• Board and shareholder approvals
• Regulatory filings

Accurate documentation is non-negotiable.

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Step 12: Close Funding & Allot Shares

After completion:

• Receive VC funds
• Allot shares as agreed
• Update statutory registers
• Complete compliance filings

Timely execution builds investor trust.

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Step 13: Manage Post-VC Investor Relationships

After funding:

• Maintain regular reporting
• Follow governance norms
• Leverage VC network
• Prepare for next funding round

VC relationships are long-term partnerships.

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Common Venture Capital Mistakes by Startups

• Raising VC too early
• Over-dilution at early rounds
• Choosing misaligned VC partners
• Weak compliance and governance
• Over-optimistic projections

Avoiding these ensures sustainable scaling.

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Why Choose Saving Mantra for Venture Capital Support

Saving Mantra helps startups with:

• VC readiness assessment
• Pitch deck and metric optimization
• VC shortlisting and outreach
• Term sheet and documentation support
• End-to-end fundraising and compliance advisory

We help startups raise strategic VC capital, not just money.

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Conclusion

Venture capital can transform startups into market leaders when approached strategically. With the right preparation, metrics, investor alignment, and governance, VC funding becomes a catalyst for sustainable scale and long-term value creation.

Follow this step by step venture capital process to raise funds with confidence and clarity.

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Disclaimer

This blog is for informational and educational purposes only and does not constitute legal, financial, or investment advice. Venture capital funding outcomes, valuations, and terms depend on business performance, market conditions, and investor discretion. Readers are advised to consult qualified legal and financial professionals before raising venture capital.

Introduction

Bill Discounting is a smart working capital solution that allows businesses and startups to convert unpaid invoices into immediate cash. Instead of waiting 30, 60, or 90 days for customer payments, businesses can discount their bills with a financier and maintain smooth cash flow.

This Saving Mantra guide explains a clear, practical, and business-friendly step by step process for bill discounting, including benefits, risks, and best practices.

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Step 1: Understand What Bill Discounting Is

Bill discounting is a short-term financing method where:

• A business sells its unpaid invoice to a financier
• The financier pays a large portion upfront
• Customer pays the invoice on due date
• Financier deducts charges and releases balance

It helps businesses bridge cash flow gaps efficiently.

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Step 2: Identify When Bill Discounting Is Needed

Bill discounting is ideal when:

• Sales are made on credit
• Customers have long payment cycles
• Working capital is blocked in receivables
• Business wants growth without equity dilution

It converts receivables into usable funds.

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Step 3: Check Eligibility for Bill Discounting

Financiers usually assess:

• Creditworthiness of the buyer (debtor)
• Valid and accepted invoice
• Business transaction history
• Industry and risk profile
• Invoice tenure and value

Strong buyers increase approval chances.

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Step 4: Decide Which Invoices to Discount

Businesses should select:

• Approved and undisputed invoices
• Invoices issued to reputed customers
• Short to medium tenure invoices
• High-value receivables for efficiency

Not all invoices are suitable for discounting.

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Step 5: Prepare Required Documentation

Typical documents include:

• Copy of invoice
• Purchase order or contract
• Proof of delivery or service completion
• KYC and business registration documents
• Bank statements

Accurate documents speed up disbursement.

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Step 6: Choose the Right Bill Discounting Partner

Bill discounting is offered by:

• Banks
• NBFCs
• Fintech platforms
• Trade finance institutions

Compare interest rates, fees, tenure, and turnaround time.

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Step 7: Submit Application & Invoice Details

Once selected:

• Upload invoice details
• Share customer confirmation if required
• Complete digital or physical verification
• Await approval decision

Most platforms offer quick approvals.

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Step 8: Invoice Verification & Approval

The financier verifies:

• Authenticity of the invoice
• Buyer acceptance
• Delivery or service completion
• Payment terms and due date

Verification protects against fraud and disputes.

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Step 9: Receive Upfront Payment

After approval:

• A major portion (usually 70–90%) is credited upfront
• Funds are received within a short time
• Business uses funds for operations or growth

This improves liquidity immediately.

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Step 10: Customer Pays on Due Date

On maturity:

• Customer pays the full invoice amount
• Payment goes to the financier or escrow account
• Settlement process is triggered

Customer payment discipline is critical.

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Step 11: Settlement & Balance Release

After receiving payment:

• Financier deducts discounting charges
• Remaining balance is released to the business
• Transaction is closed

Charges depend on tenure and risk profile.

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Step 12: Understand Costs & Risks

Key considerations include:

• Discounting fees or interest cost
• Buyer default or payment delays
• Disputed invoices
• Recourse vs non-recourse terms

Understanding terms prevents surprises.

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Common Bill Discounting Mistakes

• Discounting disputed invoices
• Ignoring buyer credit risk
• Overdependence on discounting
• Not understanding recourse clauses
• Poor documentation

Avoiding these ensures sustainable usage.

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Why Choose Saving Mantra for Bill Discounting Support

Saving Mantra helps businesses with:

• Bill discounting eligibility assessment
• Lender and platform selection
• Documentation and application support
• Cost-benefit analysis
• Working capital strategy planning

We help businesses unlock cash flow without stress.

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Conclusion

Bill discounting is an effective way to accelerate cash flow, fund operations, and support growth without raising equity. With the right invoices, credible buyers, and transparent terms, businesses can use bill discounting as a powerful working capital tool.

Follow this step by step bill discounting process to turn receivables into growth capital.

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Disclaimer

This blog is for informational and educational purposes only and does not constitute legal, financial, or investment advice. Bill discounting terms, costs, and eligibility depend on lender policies, buyer creditworthiness, and transaction structure. Readers are advised to consult qualified financial professionals before availing any bill discounting or receivables financing facility.

Introduction

Vendor Finance and Purchase Order (PO) Finance are powerful working capital solutions for startups and growing businesses that receive confirmed orders but lack funds to execute them. Instead of rejecting large orders due to cash flow constraints, startups can use PO finance to purchase inventory, pay vendors, and deliver orders smoothly.

This Saving Mantra guide explains a clear, practical, and business-ready step by step process to use vendor finance and PO finance effectively.

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Step 1: Understand What Vendor Finance & PO Finance Is

Vendor / PO Finance is a short-term funding solution where:

• Finance is provided against confirmed purchase orders
• Funds are used to pay suppliers or vendors
• Repayment happens after customer payment
• Ownership dilution is avoided

It bridges the gap between order receipt and cash realization.

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Step 2: Identify When Vendor or PO Finance Is Needed

This financing works best when:

• You receive large confirmed purchase orders
• Customers have good creditworthiness
• Working capital is insufficient
• Business operates on thin margins
• Order execution speed is critical

It is ideal for trading, manufacturing, and supply-chain-driven startups.

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Step 3: Confirm Eligibility for PO Finance

Lenders typically evaluate:

• Confirmed purchase order from a reputed buyer
• Buyer’s credit profile
• Vendor reliability and track record
• Startup’s operational capability
• Past transaction history

Strong buyers matter more than startup age.

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Step 4: Decide the Funding Requirement

Clearly define:

• Purchase order value
• Amount required for vendor payment
• Margin available in the transaction
• Tenure until customer payment

Accurate estimation avoids funding shortfall.

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Step 5: Prepare Required Documents

Common documents include:

• Confirmed purchase order
• Vendor invoices or quotations
• Customer contract or agreement
• KYC and business registration documents
• Bank statements and transaction history

Clean documentation speeds up approval.

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Step 6: Choose the Right Financing Partner

Vendor and PO finance can be obtained from:

• Banks
• NBFCs
• Supply chain finance companies
• Fintech lenders

Compare interest rates, fees, turnaround time, and flexibility.

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Step 7: Lender Due Diligence & Approval

The financer assesses:

• Authenticity of purchase order
• Buyer credibility
• Vendor capability
• Profitability of the transaction
• Risk mitigation structure

Approval is usually faster than traditional loans.

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Step 8: Disbursement Directly to Vendors

Once approved:

• Funds are paid directly to vendors or suppliers
• Goods are manufactured or procured
• Startup focuses on execution and delivery

This ensures proper fund utilization.

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Step 9: Order Fulfilment & Delivery

After vendor payment:

• Goods or services are delivered to the buyer
• Delivery confirmations are shared with financer
• Invoice is raised on the buyer

Smooth execution protects margins and relationships.

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Step 10: Customer Payment Collection

Customer pays:

• Directly to financer (in most structures)
• Or into an escrow account
• Remaining margin is released to the startup

Structured collections reduce default risk.

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Step 11: Settlement & Closure

After payment:

• Principal and interest are adjusted
• Balance margin is credited to startup
• Transaction is closed

PO finance is transaction-specific, not long-term debt.

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Step 12: Manage Risks in Vendor & PO Finance

Key risks include:

• Buyer payment delays
• Order cancellation
• Margin erosion
• Vendor performance issues

Proper contract terms and buyer selection reduce risks.

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Common Mistakes in Vendor & PO Finance

• Using PO finance for unconfirmed orders
• Poor buyer due diligence
• Underestimating execution costs
• Ignoring financer terms
• Weak documentation

Avoiding these ensures sustainable use of PO finance.

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Why Choose Saving Mantra for Vendor & PO Finance Support

Saving Mantra helps startups with:

• PO finance eligibility assessment
• Documentation and application support
• Lender selection and negotiations
• Working capital planning
• Compliance and transaction structuring

We help businesses execute orders confidently without cash flow stress.

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Conclusion

Vendor finance and PO finance enable startups to grow without waiting for capital availability. With proper planning, right buyers, and disciplined execution, startups can use PO finance to scale revenues and credibility quickly.

Follow this step by step vendor and PO finance process to convert orders into growth.

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Disclaimer

This blog is for informational and educational purposes only and does not constitute legal, financial, or investment advice. Vendor finance and PO finance terms, eligibility, and outcomes depend on lender policies, buyer credibility, and transaction structure. Readers are advised to consult qualified financial professionals before availing any financing facility.