# Section 80-IAC Startup Tax Exemption

> Section 80-IAC lets an eligible startup deduct 100% of its profits for any three consecutive years out of its first ten. It must be a DPIIT-recognised private limited company or LLP incorporated before 1 April 2030, with turnover not above ₹100 crore in the year of claim, and must hold a certificate from the Inter-Ministerial Board. Companies that opt for the 22% concessional tax regime can't claim it.

Practice: Startup Funding, ESOP & Valuation — https://www.industax.com/services/startup-funding/

The IMB certificate is the hard part: the Board looks for genuine innovation, scalability and employment potential, and many applications are rejected for vague write-ups. We prepare the application with clear evidence of the problem, the innovation and traction, and respond to any Board queries.

Timing the three years matters. Most startups are loss-making early, so the holiday should cover the first profitable years. We also model minimum alternate tax for companies under the regular regime, and the Section 79 relaxation that lets eligible startups carry forward losses despite shareholding changes, as long as the original shareholders continue to hold their shares.

## Key facts

| Item | Detail |
| --- | --- |
| Benefit | 100% of profits for any 3 consecutive years out of the first 10 |
| Entity | Private limited company or LLP |
| Incorporation | On or after 1 April 2016 and before 1 April 2030 |
| Turnover | Not above ₹100 crore in the year of claim |
| Certificate | Inter-Ministerial Board (IMB), on top of DPIIT recognition |
| Not available | If the company opts for the 22% concessional regime |

## Who needs this

- DPIIT-recognised startups expecting profits
- Startups whose IMB application was rejected
- Founders planning tax across early profitable years

## What's included

- Eligibility and regime analysis
- IMB application and query responses
- Holiday-year timing and MAT modelling
- Loss carry-forward and ESOP tax-deferral planning

## Documents

- Certificate of incorporation and DPIIT recognition
- Pitch deck / product write-up and traction evidence
- Financial statements and projections
- Patents, trademarks or awards where available

## Process

1. **Assess** — Eligibility and the best holiday years confirmed.
2. **Apply** — IMB application filed with strong evidence.
3. **Claim** — Deduction claimed correctly in the return.

## Also covers

- **Startup tax exemption** — The 80-IAC holiday and other startup tax benefits.
- **Startup tax planning** — Regime choice, loss carry-forward, ESOP tax deferral and MAT.

## FAQs

### Is DPIIT recognition enough to claim 80-IAC?

No. DPIIT recognition is the first step; the deduction also needs a separate certificate from the Inter-Ministerial Board.

### Can a partnership firm claim 80-IAC?

No. Partnership firms can get DPIIT recognition, but the 80-IAC deduction is only for companies and LLPs.

### Does MAT apply if we claim 80-IAC?

A company under the regular regime may still pay minimum alternate tax on book profits; we model this before choosing the holiday years.

## Official sources

- Startup India — DPIIT recognition and 80-IAC: https://www.startupindia.gov.in/
- Income Tax e-Filing portal: https://www.incometax.gov.in/

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Publisher: Indus Tax — CA-led tax and compliance firm (https://www.industax.com). Contact: info@industax.com, 9059139258.
This is general information, not advice for your specific facts.