80IAC – Startup Tax Exemption

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Overview

Section 80-IAC of the Income Tax Act, 1961 offers tax benefits to startups recognized by the Department for Promotion of Industry and Internal Trade (DPIIT). Eligible startups can claim a 100% tax exemption on profits for 3 consecutive financial years out of the first 10 years since incorporation. The scheme encourages entrepreneurship, innovation, and the growth of startup ecosystems in India by reducing the tax burden during the crucial early stages of business development.

Benefits of 80-IAC Registration

100% Tax Holiday – Complete exemption on profits for 3 consecutive assessment years.
Extended Eligibility Period – Applicable for startups within their first 10 years of incorporation.
Boosts Cash Flow – Frees up capital for reinvestment in business growth and innovation.
Enhanced Credibility – Being DPIIT-recognized attracts investors and partners.
Government Support – Access to other Startup India schemes and funding opportunities.

Requirements

The startup must be a Private Limited Company, LLP, or Partnership Firm.
Must be recognized by DPIIT under the Startup India initiative.
Incorporated within the last 10 years.
Annual turnover must not exceed ₹100 Crores in any financial year since incorporation.
The startup should be engaged in innovation, development, improvement of products, processes, or services, or be a scalable business with high employment potential.

Eligibility

Indian startups registered as Private Limited Companies, LLPs, or Partnership Firms.
Must hold a valid DPIIT recognition certificate.
Should not have been formed by splitting up or reconstructing an existing business.
Must not be a company created by transfer of assets of an existing business.

Required Documents

DPIIT Recognition Certificate.
Certificate of Incorporation of the startup.
Memorandum & Articles of Association / Partnership Deed / LLP Agreement.
PAN card of the startup.
Financial statements and Income Tax Returns (if applicable).
Business plan and details of innovative activities.
List of directors/partners with ID and address proofs.
Declaration stating the startup has not been formed by reconstruction of an existing business.

Registration Process in India

Obtain DPIIT Recognition – Apply on the Startup India portal to get your startup recognized.
Prepare Documents for 80-IAC – Gather incorporation certificate, PAN, financials, and business plan.
Apply to the Income Tax Department – File for 80-IAC exemption through the DPIIT-recognized startup process.
Submit Supporting Proofs – Provide details showing innovation, turnover, and eligibility.
Department Scrutiny – The Income Tax Department reviews your application and verifies DPIIT recognition.
Grant of 80-IAC Certificate – On approval, your startup receives the tax exemption eligibility.
Claim Tax Holiday in Returns – Avail 100% tax exemption for any 3 years out of the first 10 years.