IT and ITeS Policy of Uttar Pradesh 2022 - Operating Expense Subsidy

The IT & ITeS Policy of Uttar Pradesh 2022 was notified by the Government of Uttar Pradesh through the Department of IT & Electronics and implemented by the Uttar Pradesh Electronics Corporation Limited (UPELC). It covers a five-year policy period and provides a wide range of fiscal and non-fiscal incentives to attract investment in IT and IT-enabled services. Among its fiscal supports, the Operating Expense Subsidy helps eligible new IT/ITeS units manage their recurring operational costs, especially rent, bandwidth, cloud, and power during the initial years of business.

Key Features
Financial Assistance
Eligibility Criteria
Documents Required
Application Process for the Scheme

Key Features

10% reimbursement of eligible operating expenses: The government reimburses 10% of the actual, verifiable operating costs incurred by an eligible IT/ITeS unit in Uttar Pradesh. This helps startups and MSMEs reduce early-stage expenses while they stabilise revenue streams.
Operating expenses covered: The policy defines eligible costs as lease rentals for office or co-working spaces, bandwidth charges, payments to UP-based data-centre or cloud-service providers, and electricity/power bills used for business operations.
Lease rent ceiling ₹ 50 per sq ft/month: To keep benefits uniform and reasonable, rent reimbursement is calculated only up to ₹ 50 per sq ft/month, even if the actual rent is higher.
Five-year benefit window: The subsidy is available for five consecutive years starting from the date of commercial operation. This ensures sustained relief during the most cost-intensive phase of business growth.
₹ 20 crore annual state-level cap: The state has earmarked a yearly budget of ₹ 20 crore for this subsidy across all qualifying units. Approvals are processed on a first-come basis, so timely applications are essential.
Co-working space eligibility: Units operating from shared or co-working facilities are equally eligible, provided they submit valid lease or rental agreements and invoices issued under UP GST.

Financial Assistance

Component	Assistance Provided	Detailed Explanation & Example
Operating Expense Subsidy	10% of eligible operating expenses	Example: Your IT startup in Lucknow spends ₹ 40 lakh/year on rent (₹ 40 per sq ft), ₹ 10 lakh on bandwidth, ₹ 10 lakh on cloud services, and ₹ 20 lakh on electricity = ₹ 80 lakh total. You can claim 10% = ₹ 8 lakh as subsidy.
Lease Rent Ceiling	₹ 50 per sq ft per month	If your rent is ₹ 60 per sq ft, the excess ₹ 10 is ignored for reimbursement.
Duration	5 years from start of operations	Benefit applies for 5 financial years after commencement of operations.
Annual Budget Cap	₹ 20 crore for all units together	Disbursal subject to budget availability each year.

Eligibility Criteria

Who Can Apply:

IT and ITeS units registered under the UP policy, setting up new operations in Uttar Pradesh.
Units using premises on lease (including co-working) or owning suitable space and incurring eligible operating expenses per the subsidy rules.
Units incurring lease rentals (up to ₹ 50/sq ft per month for the reimbursement purpose), bandwidth charges to licensed ISP, data centre/cloud services from UP-GST-compliant provider, and power tariff.
Units that have commenced commercial operations and meet the fixed-capital investment (FCI) minimum specified for “new units” under the policy.

Who Cannot Apply:

Units located outside Uttar Pradesh.
Units that do not meet the “new unit” or FCI criteria under the policy (i.e., existing units not eligible under “new units” category).
Units whose operating expenses do not fall under the specified categories (lease rentals beyond cap, services from non-UP GST registered provider, etc.).
Units applying for expansion only (without “new unit” set-up) unless the policy explicitly allows under expansion clause.
Units that do not commence commercial operations within the timeline specified in the policy for eligibility.

Documents Required

Certificate of Incorporation / Company Registration.
Udyam Registration / MSME Registration (if applicable).
Proof of registration under IT & ITeS Policy 2022 (LoC or acknowledgement).
Lease agreement or proof of ownership of premises (if applicable).
Invoices/receipts for bandwidth, data centre/cloud services (from UP-GST registered provider).
Power bills showing actual consumption and payment.
Bank statements showing payment of operating expenses.
Annual financial statements / audited books (if required).

Application Process for the Scheme

Option 1: Apply with Bullit (Recommended)

Click here to start with guided support. Our team verifies eligibility, compiles documents, and handles application & follow-ups on your behalf. You can monitor progress while focusing on operations.

Recommended for: Lean teams. Designed to save you time and effort. Access expert help from start to finish.

Option 2: Apply via Government Portal

Visit the official portal of the implementing agency (Uttar Pradesh Electronics Corporation Ltd / Invest UP).
Navigate to the “IT and ITeS Policy 2022” section → “Fiscal Incentives for New Units”.
Download the application form for Operating Expense Subsidy.
Fill out the form with your unit details, project details, and expense categories.
Submit online/physical application with supporting documents to the nodal agency.

Option 3: Apply through District Industrial Centre or Single-Window

Use the single-window clearance mechanism in Uttar Pradesh to file your application for incentives.
The application gets routed to the nodal/empowered committee which approves the subsidy and issues the Letter of Comfort (LoC) and subsequently disbursement.

Power Combos with The Scheme