Income Tax Exemption for StartUps

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Overview

Section 80IAC of the Income Tax Act, 1961 provides a tax exemption for eligible startups in India. This section was introduced to promote entrepreneurship and innovation in the country by providing tax benefits to eligible startups.
Under Section 80IAC, a startup that meets the specified criteria can claim a 100% tax exemption on its profits and gains for a consecutive period of three out of ten years from the year of its incorporation.

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Eligibility Criteria

Nature of business

The business should focus on innovating or enhancing existing products, services, or processes, with the potential to generate employment and contribute to wealth creation.

Turnover

Its turnover should not have exceeded INR 100 crores in any of the preceding financial years.

Time Frame

An entity can be classified as a start-up for a period of up to 10 years from its incorporation date.

Registration

It must be registered as a private limited company, partnership firm, or limited liability partnership.

For New Businesses Only

An entity formed through the division or restructuring of an existing business will not be recognized as a "Start-up."

Documents Required

Required in Soft Copy Only

Documents of Directors

Name, Regd.address and nature of business
Incorporation Details ( Date of Incorporation and CIN / LLPIN)
Contact Information (E-mail ID and Contact Number)
Permanent Account Number (PAN) of the entity
DIPP Number of the entity after its recognition by the DPIIT
MOA,& AOA / LLP Agreement/ regd. Partnership deed
Board Resolution
Last 3 Years finacials attested by CA
Copy of Certificate obtained under section 56 of the Income Tax Act (Eligibility under this section)