Eligible startups can claim a 100% tax exemption on profits for three consecutive years. Learn how to get your startup recognized by DPIIT and claim Section 80IAC benefits.

India's startup ecosystem is booming, and the government has introduced significant tax incentives to foster this growth. One of the most powerful incentives is the 100% tax exemption on profits under Section 80IAC of the Income Tax Act. However, many founders are unaware of the strict eligibility criteria.

What is Section 80IAC?

This section allows recognized startups to claim a 100% deduction on their profits for any three consecutive assessment years out of the first ten years of incorporation. During these three years, the startup pays zero income tax on its operational profits.

Eligibility Criteria

• The company must be incorporated as a Private Limited Company or a Registered Partnership Firm.
• It must be recognized by the Department for Promotion of Industry and Internal Trade (DPIIT).
• Turnover should not exceed ₹100 crore in any of the financial years for which the deduction is claimed.
• The startup must be working towards innovation, development, or improvement of products or processes.

Obtaining DPIIT recognition and subsequently applying to the Inter-Ministerial Board (IMB) for the 80IAC certificate can be a rigorous process. At VAP & CO, our startup advisory team handles the entire application process for you.