Tax Holiday for Startups Section 80-IAC

Did you know that out of India's 99,000+ DPIIT recognised startups, only about 1% actually enjoy tax holiday benefits under Section 80-IAC of the Income Tax Act, 1961? There is a common myth that all DPIIT recognised startups have benefit of tax holiday under Income Tax.

Many founders are unaware about their startup's eligibility. Are you a startup founder feeling uncertain about your startup's eligibility for tax holiday?

Here is a quick guide on the eligibility criteria for a DPIIT registered startup for tax holiday under 80-IAC along with the necessary documentation and steps for application.

Eligibility

Section 80-IAC 

Eligible start-up to get deduction of 100% of profits and gains for 3 consecutive years out of 10 years beginning from year of incorporation / registration.

To obtain a deduction under Section 80-IAC, the eligible start-up will have to obtain a certificate by making an application to the DPIIT in Form-1 along with specified documents to the Inter-Ministerial Board of Certification.

Note :

•The entity should not be formed by splitting up or reconstruction of an existing business

•In case of an asset heavy startup which has plant & machinery, value of second hand plant & machinery should be less than 20% of total plant & machinery

Application Process

Information / document required:

1.MOA* (For Company) or LLP Deed (For LLP)

2.Audited Balance Sheet and P&L for last 3 financial years

3.Income Tax Returns and Acknowledgement for last 3 financial years

4.Pitch deck of the Company as per the guidelines of DPIIT

5.A video describing the vision, mission prototype and business of the startup as per the guidelines of DPIIT

6.Name and Designation of authorized signatory on behalf of the Company

7.Board Resolution passed for availing tax holiday (if any - this is optional document)

*In case of spice MOA a printout of the same will have to be taken and a scan of the printout should be uploaded or the spice MOA should be converted into a print-able PDF before uploading

How to file Form for Section 80-IAC?

If you are a founder looking to understand your startup's eligibility or to avail the benefit of tax holiday for your business, reach out to us at [email protected]

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