The growing popularity of One Person Companies (OPCs) in India is being further accelerated by a range of tax benefits tailored to support small and single-founder businesses. As startups look for efficient and flexible corporate structures, OPCs have emerged as a highly attractive option, especially after government initiatives streamlined their incorporation and compliance requirements. Recognized under the Companies Act, OPCs enjoy many of the tax advantages offered to private limited companies, while also benefitting from additional exemptions under schemes such as Startup India and Micro, Small and Medium Enterprises (MSME).

One of the key advantages for registered OPCs is the ability to claim deductions under Section 80-IAC of the Income Tax Act, which provides eligible startups with a 100% tax exemption on profits for three consecutive financial years out of the first ten years. Additionally, OPCs registered as startups can benefit from a reduced corporate tax rate of 22% (or even 15% for newly incorporated manufacturing firms), compared to higher rates applicable to other business forms. This reduced tax burden makes OPCs a preferred choice for early-stage entrepreneurs seeking to retain more profits for reinvestment.

Furthermore, OPCs are exempt from dividend distribution tax (DDT), allowing business owners to take dividends without incurring additional tax liabilities at the company level. They are also eligible for input tax credit under the GST regime and can claim depreciation and business expense deductions under standard provisions. These tax incentives, when combined with simplified compliance and full ownership control, have led to a surge in OPC registrations among digital, service, and consulting startups. As a result, OPCs are fast becoming the go-to structure for solo founders seeking tax efficiency and long-term scalability.