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Steps to avail the 80 IAC Startup Tax Exemption in India
Register as a Startup
The startup must be officially recognized by the Department for Promotion of Industry and Internal Trade (DPIIT). This involves completing the registration process on the government portal to obtain the startup recognition certificate, which is a prerequisite for tax exemption benefits.
Ensure Eligiblity
The startup must meet specific eligibility criteria to qualify for the exemption under Section 80-IAC. This includes being incorporated as a private limited company or LLP, having an annual turnover of less than INR 100 Crores, and being within 10 years of incorporation.
File for Tax Exemeption Application
Once the startup meets the eligibility requirements, it must file an application with the Inter-Ministerial Board (IMB) for certification. This application can be submitted through the official online portal
Obtain Certificate From IMB
The Inter-Ministerial Board (IMB) will evaluate the startup’s potential for growth and innovation. If the board deems the startup eligible, it will issue a certification confirming the startup's qualification for the tax exemption under Section 80-IAC, allowing it to benefit from tax relief.
Claim Tax Exemption
After receiving the certification, the startup can claim tax exemptions under Section 80-IAC of the Income Tax Act. This exemption allows the startup to enjoy tax relief on its profits for up to 3 consecutive years within the first 10 years of incorporation, provided all conditions are met.
Ensure Complaince
To retain the tax exemption status, the startup must ensure ongoing compliance with all tax regulations. It must file timely returns, maintain proper records, and ensure that it continues to meet the innovation and employment-generation criteria specified by the government throughout the exemption period.
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