80 IAC Tax exemption

A startup may get tax exemption under section 80 IAC of the Income Tax Act after receiving recognition. After receiving approval for tax exemption, a startup can take advantage of tax holidays for three consecutive fiscal years throughout its first 10 years of existence.

Eligibility Criteria:

  • The entity should be a recognized Startup  
  • Only Private limited or a Limited Liability Partnership is eligible for Tax exemption under Section 80IAC
  • The Startup should have been incorporated after 1st April, 2016

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4.8
4.5

IMB Certification for Tax Advantages for Startups.

Tax Benefits to Startups in India

India is the world's third largest startup ecosystem, with three to four new enterprises launching daily, making it the base with the most rapid expansion. Not only does a startup achieve the entrepreneur's objective, but it also employs millions of people and helps to the nation's development.

By introducing Startup India Scheme, the Indian government has made steps to boost the ease of doing business and provide an enabling and stimulating environment for these entrepreneurs.

The government gives tax exemptions under section 80IAC of the Income Tax Act of 1961 in order to assist entrepreneurs. The income tax allowances for startups facilitate their growth and optimal operation. To utilise these services, entrepreneurs must obtain certification from IMB (Inter Ministerial Board).

Benefit

To be eligible for DPIIT startup recognition, your company must meet the following requirements:

Company Age

Period of existence and operations should not exceed 10 years from the date of incorporation

Entity Type

Incorporated as a Private Limited Company, a Registered Partnership Firm, or a Limited Liability Partnership

Annual Turnover

Should have an annual turnover not more than Rs. 100 crore for any of the financial years from its registration

Original Entity

Entity should not have been formed by splitting up or reconstructing an already existing business

What is the Startup
Startup Definition under Startup india Scheme

Your company must meet the following criteria to be considered eligible for DPIIT startup recognition:-

  • Original Entity

Entity should not have been formed by splitting up or reconstructing an already existing business

  • Innovative and Scalable

Should work towards development or improvement of a product, process or service and/or have scalable business model with high potential for creation of wealth & employment

To be eligible for DPIIT startup recognition, your company must meet the following requirements:

  • Company Age

Period of existence and operations should not exceed 10 years from the date of incorporation

  • Entity Type

Incorporated as a Private Limited Company, a Registered Partnership Firm, or a Limited Liability Partnership

  • Annual Turnover

Should have an annual turnover not more than Rs. 100 crore for any of the financial years from its registration

  • Original Entity

Entity should not have been formed by splitting up or reconstructing an already existing business

  • Innovative and Scalable

Should be developing or improving a product, process, or service, or have a scalable company model with strong potential for wealth growth and job creation.

Mandatory documentation and information necessary for IMB certification for Indian startups

Certification from IMB is necessary to obtain tax exemptions. The following records are needed to obtain IMB Certification:

  • Incorporation Certificate
  • Startup India Registration certificate
  • Summary of the Startup's business activities
  • A letter of funding from angel investors (if any)
  •  A recommendation letter from an established competitor (if available)
  • Patent applications published in journals (if any)
  •  If applicable, a recommendation from the incubators

HELP & FAQs

What is the meaning of the DIPP?

The Department of Industrial Policy and Promotion (DIPP) is responsible for implementing promotional and developmental initiatives for the expansion of economic sectors.

How are startups defined under the Startup India Scheme?

The definition of startup is described in the preceding section.

Who are the IMB department's personnel?

Members of the Inter-Ministerial Board include:
• Additional Secretary (DIPP)
• Representative of Ministry of Corporate Affairs (MCA)
• Representative of Ministry of Electronics and Information Technology
• Representative of RBI (Reserve Bank of India).
• Representative of CBDT (Central Board of Direct Taxes).

What is the significance of the new business initiative?

Startup initiative promotes entrepreneurship and innovation in the country, hence providing jobs and money for the country.

Who is eligible for tax benefits under Income Tax section 80IAC?

All mandatory eligibility requirements for these benefits are listed above.

How do Startups get certification from IMB

The entire certification process from IMB is detailed above.

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Legal Info

Knap Advisory : We Care | We Deliver | We Honor

We have been especially crucial in ensuring startups are compliant with India's complex legal structure. We accept responsibility and obligation on behalf of the business owners and co-founders for adhering to all legal requirements. We strive to deliver a wide range of quick, effective, and compliance-focused services to any company or individual with a startup mentality. We are abide by our motto:- We Care, We Deliver, We Honor.