Income Tax Exemption (up to 3 years under Section 80-IAC)

DPIIT-recognized startups are eligible for exemption from income tax on profits for up to 3 years.

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Understanding Income Tax Exemption

The Income Tax Exemption under Section 80-IAC is a flagship government incentive designed to provide financial relief to recognized startups. This scheme exempts the entire taxable income from tax for up to 3 consecutive years from the date of incorporation or 5 years from the date of the first commercial transaction, whichever is earlier. This can result in substantial savings, especially during the critical growth phase of a startup.

Estimated Benefit

₹10-30+ Lakhs depending on annual profits

Timeline

3 consecutive years from incorporation or first commercial transaction

How to Apply

First, your startup needs to be recognized by DPIIT. Once recognized, you can claim the exemption by filing your income tax return with the necessary supporting documentation including your DPIIT recognition certificate, incorporation documents, and audited financial statements.

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Eligibility Criteria

Your Startup Must...

Startup must be recognized by DPIIT
Incorporated after 1st April 2016
Active in permitted sectors (excludes multi-level marketing, tobacco, alcohol, etc.)
Turnover not exceeding ₹25 Crore
Not listed on any stock exchange

Key Requirements

Startup must be recognized by DPIIT
Incorporated after 1st April 2016
Active in permitted sectors (excludes multi-level marketing, tobacco, alcohol, etc.)

Documents Required

Essential Documents

DPIIT Startup Recognition Certificate
Certificate of Incorporation
Audited Financial Statements for the relevant assessment year
Board Resolution authorizing claim
PAN of the startup
List of promoters and their shareholding