Legal Kamkaj

Your One-Stop Solution for Registrations & Compliances

Legal Kamkaj

Legal Compliance and Service Consultancy Across India
Call Now
WhatsApp
Menu

80IAC Registration Tax Exemption for Startups

80IAC Registration is an important tax exemption under Section 80-IAC of the Income Tax Act, 1961, designed to help DPIIT-recognized startups in India. This benefit allows eligible startups to get a 100% tax exemption on profits for three consecutive years within the first ten years of incorporation. It helps reduce the financial burden and allows startups to focus on business growth.

To qualify for 80IAC tax exemption, a startup must be a Private Limited Company or LLP, registered with Startup India, and involved in innovation, technology, or scalable business activities. This scheme encourages entrepreneurship by providing significant tax benefits, allowing startups to reinvest their earnings and expand efficiently. Legal Kamkaj assists startups in obtaining 80IAC Registration, ensuring a smooth process and compliance with all legal requirements.

Call : +91 75728 26693

80IAC Registration ?

Startup India Tax Exemption – 80IAC Registration

The Startup India Tax Exemption under Section 80-IAC of the Income Tax Act, 1961, is a major benefit for DPIIT-recognized startups in India. This scheme allows eligible startups to claim a 100% tax exemption on profits for three consecutive years within the first ten years of incorporation, helping them reduce financial burdens and focus on business growth.

Why is DPIIT Recognition Important for 80IAC?

✔ Mandatory for 80IAC Registration – Only DPIIT-recognized startups can apply for 80IAC tax exemption.
✔ 100% Tax Exemption – Eligible startups can claim tax-free profits for 3 consecutive years.
✔ Access to Government Benefits – DPIIT-recognized startups get incentives like self-certification for labour laws, easier funding access, and IP support.
✔ Investor Confidence – Startups with DPIIT recognition gain credibility, attracting more investors and funding opportunities.

Benefits of Section 80IAC Registration

80IAC Registration offers a range of tax benefits and other advantages for eligible startups recognized under the Startup India initiative. Here’s a quick overview of the key benefits:

100% Tax Exemption on Profits

Startups can claim 100% tax exemption on profits for three consecutive years within the first ten years of incorporation, helping them save money and grow faster.

Boost to Business Growth

With no tax burden, startups can reinvest profits into expansion, innovation, and technology development.

Credibility & Investor Confidence

Being DPIIT-recognized boosts your startup’s credibility, making it easier to attract investors, partners, and customers.

Access to Government Schemes

80IAC registration opens doors to government schemes, funding, and IP support, providing additional growth opportunities.

Compliance Flexibility

80IAC startups benefit from simplified tax processes and regulatory relief, allowing them to focus on running the business.

Angel Tax Exemption

Startups with 80IAC recognition are exempt from angel tax (Section 56 of the Income Tax Act), making it easier to raise funds without facing tax-related issues on investments.

Documents Needed for 80-IAC Registration

  1. MoA or LLP Deed
    • Private Limited: Certified MoA (SPICe MoA if applicable).
    • LLP: Certified LLP Deed.

  2. Board Resolution (Authorising Authorised Signatory)
    • If applicable, include any Board Resolution related to the tax exemption.

  3. Annual Financial Statements
    • Certified Balance Sheet
    • Profit & Loss Account
    • For the last three years or from incorporation.
      (Ensure that both the Balance Sheet and Profit & Loss Statement are certified by a Chartered Accountant.)

  4. Income Tax Returns
    • Upload ITRs for the last three years or since incorporation.

  5. Video Presentation
    • Follow 80-IAC Video Guidelines to explain your startup’s mission and products.

  6. Pitch Deck
    • Include a pitch deck covering business model, market analysis, and financial projections. (As per guidelines of Startup India)

  7. Additional Clarifications
    • Be ready to provide more information if requested.
    • Shareholding pattern of the entity (On entity letterhead)

  8. Section 56 Exemption Certificate (If Applicable)
    • Include if your startup has received angel tax exemption.
Documents Needed for 80-IAC Registration

Eligibility for Startup India Tax Exemption (80IAC Registration)

80IAC Registration

To qualify for 80IAC Tax Exemption, your startup must meet these simple criteria:

  1. Type of Company
  • Must be a Private Limited Company or Limited Liability Partnership (LLP).

  1. DPIIT Recognition
  • Must be recognized by DPIIT under the Startup India program.

  1. Age of the Startup
  • Must be less than 10 years old from the date of incorporation.

  1. Turnover
  • The annual turnover should be less than ₹100 crores.

  1. Innovation & Scalability
  • Your startup must focus on innovation, technology, or a scalable business model.

  1. No Splitting or Reconstructing
  • The startup must not be formed by splitting or reconstructing an existing business.

Purpose of 80IAC Registration

  1. Promote Innovation
  • To encourage startups to engage in technology-driven innovation and solve complex problems.

  1. Support Early-Stage Growth
  • Provides tax relief to help startups reinvest their profits into business development, research, and technology.

  1. Boost Entrepreneurial Spirit
  • To create a favourable business environment for entrepreneurs, helping them build and scale their companies with minimal initial financial pressure.

  1. Attract Investors
  • Being DPIIT-recognized increases credibility, making it easier to attract funding.

  1. Promote Economic Growth
  • Helps create jobs and promotes economic development.

How to Apply for 80IAC Tax Exemption

Applying for 80IAC Tax Exemption is straightforward. Follow these easy steps:

  1. Check Eligibility

Make sure your startup meets the following:

  • Private Limited Company or LLP.
  • DPIIT-recognized under Startup India.
  • Less than 10 years old.
  • Turnover under ₹100 crores.
  • Involved in innovation, technology, or a scalable business model.

  1. Register with DPIIT
  • If you haven’t already, get your startup DPIIT-recognized by registering under the Startup India program.

  1. Prepare Documents

You’ll need to collect:

  • MoA or LLP Deed.
  • Income Tax Returns for the past 3 years.
  • Annual Financial Statements.
  • Pitch Deck and Video Presentation.

  1. Submit Your Application
  • Go to the Startup India website and fill out the 80IAC application form.
  • Upload your documents and business details.

  1. Review & Approval
  • Your application will be reviewed. If everything is in order, you’ll get the 80IAC Tax Exemption approval.

  1. Receive Certificate
  • Once approved, you’ll get a certificate confirming your 80IAC Tax Exemption, allowing you to enjoy 100% tax exemption for 3 years.
FAQs on 80IAC Registration
  • 80IAC refers to Section 80-IAC of the Income Tax Act, which provides eligible startups with a 100% tax exemption on profits for three consecutive years out of the first ten years of incorporation.

A company or LLP that:

  • Is recognized as a Startup by DPIIT (Department for Promotion of Industry and Internal Trade)
  • Was incorporated on or after April 1, 2016
  • Has a turnover of less than ₹100 crore in any previous financial year
  • Is engaged in innovation, development, or improvement of products, processes, or services
  • 100% tax exemption on profits for 3 years
  • Improved cash flow and savings
  • Encourages startups to reinvest in their growth