80-IAC Tax Exemption

80-IAC Tax Exemption

80-IAC Tax Holiday Benefit for Startups in India

The Section 80-IAC of Income Tax Act, 1961 offers a special tax holiday allowance exclusively to eligible startups. The government introduced this scheme under the Startup India initiative to encourage entrepreneurship and innovation.

What is 80-IAC Exemption?

Under this, approved startups receive 100% tax exemption on profits for 3 consecutive years within 10 years from incorporation.

In easy words, if you are a qualifying startup, then you will not need to pay income tax for any 3 years within the first 10 years. You can invest this amount in growing your business.

Eligibility for 80-IAC Exemption

• You need to comply with some conditions:
• The startup needs to be recognized by DPIIT (Department for Promotion of Industry and Internal Trade).
• Incorporation must be in the form of a Private Limited Company or LLP.
• The venture must be involved in product / process / service innovation, development, or improvement, or should have a scalable business model creating employment and wealth.
• Turnover must never have exceeded ?100 Cr since incorporation.
• The venture must not have been initiated by dismantling or rebuilding an existing venture.

Advantages of 80-IAC Exemption

• 100% Tax Holiday for 3 years (out of 10 years).
• The tax burden is light on a startup in the initial phase.
• Cash flow is freed up which can be plowed back into the company.
• Entrepreneurship and innovation are encouraged.

How to apply for 80-IAC Exemption?

• Obtain DPIIT recognition from the Startup India portal.
• Apply for 80-IAC Tax Exemption Certificate on the portal.
• File documents – Incorporation Certificate, PAN, financials, business details.
• After approval, seek exemption while submitting your ITR.

Why EfilingCompany?

We at EfilingCompany offer total assistance to startups for DPIIT recognition and 80-IAC exemption path. We take care of the entire process right from documentation to filing so that you don't need to concentrate on anything else but your business growth.