💼 Zero Tax for Startups? Yes, Please!

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All You Need to Know About Section 80-IAC – India’s Startup Tax Holiday

Ever wondered if a startup in India can legally pay zero income tax for three years?
Yes, it’s true. If your startup checks the right boxes, you can claim a 100% tax exemption under Section 80-IAC of the Income Tax Act. Here’s everything you need to know—explained simply and practically.

What’s the big deal with Section 80-IAC?
It allows eligible Indian startups to pay zero income tax for three consecutive years by claiming a 100% deduction on profits. This tax holiday is not just a relief, it’s a growth enabler—helping startups reinvest profits into scaling up instead of losing that edge to early taxation.

✅Who is eligible for this tax holiday?
To qualify, your startup must tick all these boxes:
Criteria Requirement:
1)Entity Type Private Limited Company or LLP
2)Age of Startup Less than 10 years old from incorporation
3)DPIIT Recognition Mandatory
4)Turnover Limit Less than ₹100 crore in the year before claiming the deduction
5)Innovation Must be doing something new, scalable, or impactful
💡Example:
Imagine a tech startup that uses AI to predict crop diseases for farmers. ✅ It qualifies.
But a startup that’s just opened another fast-food franchise chain with no unique tech or model? ❌ Likely not eligible.

📝How can a startup apply for this tax benefit?

1. Get DPIIT Recognition – Apply via Startup India Portal → Submit documents like business plan, incorporation certificate, etc.
2. Apply to CBDT for Tax Exemption – After DPIIT approval → File for income tax exemption certificate with CBDT
⚠️This benefit is not automatic. You need both recognitions before claiming it.

📅When was Section 80-IAC introduced?
It was launched on April 1, 2017 as part of India’s Startup India initiative.

📆How long can a startup enjoy this tax break?
Three consecutive financial years of 100% tax exemption. You can choose any 3 years within the first 10 years of incorporation. 💡Tip: Claim after becoming profitable for maximum impact.

🧾What changed in Budget 2025?
The incorporation deadline to be eligible for this benefit was extended to March 31, 2030. ✅ More startups can now qualify!

💡Why is this benefit so powerful for early-stage startups?
Because every rupee matters.
Example: Profit ₹30 lakh → Without benefit: ~₹7.5 lakh tax → With benefit: ₹0 tax → Extra funds for tech, hiring, or marketing.

🚀Real Impact:
Founders can use tax savings to grow faster without taking loans or giving up equity.
🤔Why do so many founders miss out?
• Lack of awareness
• Misunderstanding process
• Missing DPIIT or CBDT deadlines

🎯Expert Insight from CA Bhavesh Panpaliya:
“Most founders either aren’t aware or misunderstand the process. They assume claiming 80-IAC is as easy as ticking a box during ITR filing. It’s not—it’s an application-based benefit.”


🔑 Quick Recap: Startup Tax Holiday at a Glance
Feature Details
✓Section 80-IAC
✓Benefit 100% income tax exemption for 3 years
✓Eligibility DPIIT-recognized, ✓<10 years old, ✓<₹100 cr turnover,✓ innovative
✓Apply To DPIIT →✓ then CBDT
✓Claim Period Any 3 years in the first 10 years
New Deadline Incorporate before March 31, 2030

FAQs

Q1.What is Section 80-IAC?
It’s a provision that allows eligible startups in India to claim 100% income tax exemption for three consecutive years.

Q2.Who can apply?
Any DPIIT-recognized startup that is <10 years old, has turnover <₹100 crore, and is innovative.

Q3.How to apply?
First get DPIIT recognition, then apply to CBDT for the exemption certificate.

Q4.Is it automatic?
No. It requires prior approval from DPIIT and CBDT.

Q5.What is the deadline?
Incorporate before 31 March 2030 to qualify.

🚀 Want to know if your startup qualifies? Let’s make sure you don’t miss out on ₹ lakhs in tax savings.
📞 CA Bhavesh Panpaliya – 8888755557