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Fueling Startup Growth: Unlock Tax Exemption with DPIIT - Startup India u/s 80IAC
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To avail the benefits under Section 80IAC, a startup must meet certain eligibility criteria. The startup should be recognized by the Department for Promotion of Industry and Internal Trade (DPIIT) under the Startup India initiative. The recognition signifies that the startup meets the specified criteria related to innovation, scalability, and job creation.
Under Section 80IAC, eligible startups can enjoy a tax holiday for a certain period. They are exempted from paying income tax on their profits for a consecutive period of three out of ten assessment years from the year of incorporation. This tax exemption provides financial relief to startups during the initial years of operation and encourages investment in innovative ventures.
The tax exemption u/s 80IAC has certain conditions and limitations. It applies only to startups engaged in eligible sectors as defined by the government. Additionally, the total turnover of the startup should not exceed Rs. 25 crores in any of the eligible assessment years.
Startups availing the tax exemption under Section 80IAC are required to fulfill certain compliance requirements. They need to maintain proper records, submit timely tax returns, and adhere to other regulatory obligations as prescribed by the tax authorities.
Both PAN and Aadhaar Card of all Indian Shareholders and Directors
Either Voter ID, Passport, or Driving License of the Shareholders and Directors.
Copy of the latest Telephone Bill, Electricity Bill, or Bank Account Statement of the Shareholders and Directors
Latest passport size photographs of all the Shareholders and Directors
Either of the latest Utility Bill (Electricity, Telephone, Gas, Water) or Property Tax Bill of the registered office address. Rent agreement and NOC from the owner in case of rented property
The tax exemption provided under 80IAC provides significant financial relief to startups, especially during the initial years of operation when they may be facing financial challenges. It allows startups to retain and reinvest their profits into the business, promoting innovation, and supporting long-term sustainability.
By offering tax benefits to startups, Section 80IAC encourages entrepreneurship in India. It motivates individuals to take the risk of starting their own ventures, driving innovation, job creation, and economic growth. The tax exemption acts as an incentive for aspiring entrepreneurs to establish and operate startups.
Startups often engage in innovative activities, developing new products, services, or technologies. Section 80IAC supports and promotes such innovation by providing tax relief. The tax savings can be utilized for research and development, testing new ideas, and bringing innovative solutions to the market, fostering overall technological advancement.
Startups recognized under the Startup India initiative and availing the benefits of 80IAC are subject to certain compliance requirements. However, compared to traditional tax obligations, the compliance process for startups is relatively streamlined and simplified. This helps startups focus on their core business operations rather than spending excessive time and resources on complex tax compliance.
Startups that have obtained recognition from the Department for Promotion of Industry and Internal Trade (DPIIT) under the Startup India initiative are eligible to avail the tax benefits under Section 80IAC. They should meet the specified criteria regarding their nature of business and innovation.
Under Section 80IAC, eligible startups can avail a deduction of 100% of the profits and gains derived from their eligible business for a consecutive period of three out of ten assessment years, starting from the year of incorporation. This deduction helps in reducing the taxable income of the startup.
You can apply for recognition under the Startup India initiative through the official Startup India portal or mobile application. Fill in the required details about your startup, provide the necessary documents, and submit the application for review by the concerned authorities. Upon approval, you will receive the certificate of recognition.
Startups availing the benefits under Section 80IAC should ensure compliance with the conditions mentioned in the relevant provisions. This includes maintaining proper financial records, filing accurate income tax returns within the specified deadlines, and complying with other tax-related obligations. It is advisable to consult with tax professionals to understand the specific compliance requirements and ensure adherence to them.
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