Overview
Newly established and incorporated startups often face a shortage of financial resources
during their initial stages of operations. This further hurts their
sales and profits. The situation further gets worsened when out of the minimal
income they earn, a huge chunk is paid as taxes. Hardly, any prot is left behind for
reinvestment.
The government, realizing this struggle, has allowed several tax exemptions for
Startups. One among them is tax exemption under Section 80IAC of the Income Tax
Act. Section 80IAC provides a 100% tax exemption for
. The tax exemption can be availed for any three consecutive assessment years,
as long as the Startup is eligible.
Key Features of 80IAC Tax Exemption:
- DPIIT Recognition Require
- 100% Tax Exemption
- Tax Exemption for 3 Years
- Online Application Process
- Free of Cost Filing
Play Video about How to claim 100 % Tax exemption for Startups under Section 80
IAC
80IAC Tax Exemption Eligibility Criteria
The 80IAC Tax exemption criteria depends on factors like DPIIT Recognition, age of
the startup, and its overall business turnover. Also, the innovation factor in its
products or services is crucial for claiming the tax exemption. We have explained all the
80IAC tax exemption eligibility criterias below. Ensure that all these criterias are met
before the application for 80IAC exemption is actually led.
Either a company or an LLP or registered partnership rm
The startup must either be a Company or a Limited Liability Partnership or registered
as a partnership rm. Startups established as any other business structure cannot claim
this deduction.
Startup Recognition by the DPIIT:
The Department of Promotion of Industry and Internal Trade must recognize
startups and the Startup has obtained DPIIT Recognition Certicate.
Incorporated after 1st April, 2016:
Any startup incorporated/registered after the 1st of April 2016 till date can avail the
tax exemption u/s 80IAC
Not Exceeded 10 years since Incorporation:
Deduction can be claimed in any three years within the rst 10 years from the
Startup’s incorporation
New and Original Entity:
The startup must not be formed by splitting up or reconstruction of an existing
business entity. There are few exceptions u/s 33B of the Income Tax Act.
Operates with New Plant and Machinery:
The startup must not be formed by the transfer of existing plant and machinery
already in use.
Turnover not exceeding Rs.100 crores:
The turnover must not exceed Rs.100 crores in the Financial Year for which the
deduction is claimed.
Objective of employment generation or wealth creation:
The startup must be operating with the primary aim of financial growth, employment
generation, and wealth creation.
Must deal in innovative products, services, or processes:
The concerned startup must either develop new innovative products, services, or
processes, or innovate an improved version of the existing ones. However, the entities
formed by splitting up or reconstruction of an existing business are not eligible for
DPIIT Startup Tax Benets.
Checklist & Documents
The table below has two sections. The first one lists the prerequisites of Section
80IAC registration process. The second one, on the other hand, lists the documents
required for the same. Meeting both these checklists is essential before ling the
application for 80IAC tax exemption.
Minimum Requirements
- Certificate of Incorporation
- DPIIT Startup Recognition
- Registered and active mobile
- number
- Registered and active email
- address
List of Documents
- CIN / LLPIN
- MOA / Partnership Deed
- Business PAN
- DPIIT Recognition Certificate
- CA Certified Balance Sheet for the last
3 FY
. ITR of last 3 FY - Section 56 Exemption Certificate
. Link to Video Presentation - Pitch Deck
- Board Resolution (for company
only)
Note:
We recommend you send the soft copies of documents and filled questionnaires
shared with you. We will verify the information and legal documents sent to us. Please
contact us for further clarifications.
Section 80IAC Registration Process for
Startups
Wondering how to apply for tax exemption online under Section 80IAC of the
Income Tax Act? We have provided an easy stepwise guide for you to understand and
navigate. You can apply for a tax exemption certificate online on the Startup India
Website. All you need to do is visit the website, login to your account, and follow the
procedure explained below.
Step-1: Documentation
Section 80IAC registration process for Startups is completely application-based. So,
the chances of its approval depend on the accuracy of the documents submitted. At
Setindiabiz, we provide full documentation assistance as part of our 80IAC
registration service. You can get your documents drafted and verified by experts to
avoid any hassle later.
Step 2: Log in to the Startup India Porta
After preparing all the necessary documents, the next step is to visit the official website
of Startup India. Here, in the main menu, navigate to the “Recognition” option, and
choose “Apply for Tax Exemptions” from the dropdown. You will be redirected to a
page where you can access the 80IAC Application after signing into your account
Step 3: Fill out the Application form
Fill out the 80IAC form with necessary details like name, address, and business activity
of the startup. The applicant must provide his name and contact information as well.
Since the startup is recognized by the DPIIT, you must submit the DIPP number,
incorporation and PAN details
Step 4: Upload all necessary attachments
After filling out all the details, upload the necessary documents. These include the
MOA or LLP Deed, copy of annual accounts and ITR, video link, pitch deck and so
on. A complete list of these documents is given in the section above.
Step-5: Enter the details of the authorized signatory
Lastly, provide basic details of the applicant or authorized signatory to complete the
form. These include his name and designation in the Startup. Usually, the authorized
signatory is one of the company’s directors or an LLP / Firm’s partners.
Step 6: Submit the Application
Once all the details have been filled out correctly you can nally submit your
application on the Startup India Portal. The application will be processed by the
Department in a few days. If all details and documents are found to be correct, the
application will be approved by the Department.
Step-7: Get 80IAC Tax Exemption Certicate
After the application is approved, the DPIIT will grant an 80IAC tax exemption
Certificate to the applicant Startup. This certificate will conclusively prove the
eligibility of the Startup to claim Startup Tax Exemption under Section 80IAC.
Tax Benefits for Startups Under Section
80IAC
Startup India Tax benefits under Section 80IAC ensure that your Startup gets 100%
exemption for any 3 consecutive years. How exactly would this contribute to the
growth and success of a Startup? Well, the Section 80IAC benefits listed below will
provide clear insights. These benefits work phenomenally across the spectrum for all
kinds of recognized startups in India.
100% Tax Deduction
Recognized Startups receive a 100% tax deduction on profits. This eliminates any
requirement of tax payment during the crucial initial phases.
Tax Exemption for Startups
Startup tax benefits under 80IAC extend for any 3 consecutive financial years after
DPIIT recognition. The applicant can choose these 3 FYs at will
Reduced Tax Burden
Startup Tax Deductions u/s 80-IAC helps cope up with the heavy tax burden. New
businesses usually face this burden during the starting stages.
Easy & affordable to claim
DPIIT Startup Tax Exemption under Section 80IAC can be claimed through a quick,
cost-effective, and online application process.
Frequently Asked Questions
Is 80 IAC tax exemptions for small businesses
applicable under the Income Tax Act?
Yes, small businesses or registered MSMEs can avail of 80IAC tax exemption if they are
recognized as a Startup by the DPIIT.
- Which authority approves the 80IAC tax exemption
for Startups?
The application for Startup Tax deduction under Section 80IAC is approved by the
DPIIT.
2. For what duration can Startup tax exemption under
Section 80IAC be availed?
Tax Exemption for Startups under Section 80IAC can be availed for any three 3
consecutive years. The only condition here is that in all these 3 years the Startup’s
eligibility for 80IAC tax exemption must prevail.
3. Which business entities are eligible to claim tax
exemption under 80IAC?
Only LLPs, Registered Partnership Firms, and Companies recognized as Startups by
the DPIIT can claim Section 80IAC tax benefits.
4. Can a foreign business apply for 80IAC
exemption?
No. A foreign business cannot be recognized as a Startup by the DPIIT. So, it cannot
claim DPIIT Startup tax exemption u/s 80IAC.
5. How many days does it take for an 80IAC application to get approved?
The time required for an 80IAC application to get approved depends on several factors.
The final decision is in the hands of DPIIT’s inter-ministerial body. Hence predicting
an exact date is not practical. However, usually the application gets processed within 2
to 3 weeks from the last date.
6. What is the government fee for the 80IAC exemption application?
The application for 80IAC tax exemption can be submitted free of cost. There is no
government fee applicable for 80IAC application.
7. Can my startup avail 80IAC exemption if it uses machinery previously used outside India?
Yes. Startups can avail of 80IAC exemption if it use machinery, previously used outside
India, but not by the concerned startup. Moreover, prior to its installation outside
India, it must have never been in use in India by any business.
Can reconstructed businesses claim 80IAC
exemption?
8. Can reconstructed businesses claim 80IAC exemption?
- Reconstructed businesses cannot claim 80IAC exemption unless they fall under
- section 33B of the Income Tax Act. This section allows a reconstructed industrial
- undertaking to claim 80IAC Tax exemption, if it was discontinued because of
- Damage or destruction caused by natural calamities
- Damage caused by riots / civil disturbances
- Damage caused by accidental re/explosion
- Damage caused by or an act of the enemy
9. When will the 80IAC exemption automatically cease?
An entity shall cease to avail startup India tax exemption on completion of ten years
from the date of its incorporation. Also, the recognition becomes invalid if its
turnover for any financial year exceeds one hundred crore rupees.
10. Is 80 IAC tax exemptions for small businesses applicable under Income Tax Act?
Yes, small businesses or registered MSMEs can avail 80IAC tax exemption if they are
recognized as Startup by the DPIIT
