Tax & Accounting

Tax Exemption Under 80IAC

Section 80-IAC of the Income Tax Act, 1961 gives an eligible startup a 100% deduction of profits and gains from an eligible business for three consecutive assessment years chosen out of its first ten years from incorporation. The startup must be DPIIT-recognised and hold an eligibility certificate from the Inter-Ministerial Board of Certification (IMB), be incorporated on or after 1 April 2016 and before 1 April 2030 as extended, and have turnover not exceeding Rs 100 crore.

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Service Overview

What is Tax Exemption Under 80IAC?

The 80-IAC tax holiday is a deduction from taxable profits available to an eligible startup, a company or LLP engaged in an eligible business involving innovation, development or improvement of products or processes or a scalable business model with employment or wealth creation potential. DPIIT recognition alone does not entitle a startup to the deduction; a separate IMB certificate is mandatory.

The deduction is 100% of profits for any three consecutive assessment years within the first ten years. The audit report in Form 10CCB must be furnished electronically one month before the due date of the return. The IMB certificate can be revoked if obtained on false information.

Tax Exemption Under 80IAC

Who Needs This Service

DPIIT-recognised startups, companies and LLPs, expecting profits in their first ten years that want a 100% income tax holiday for three years can use this scheme.

Startups with losses in early years should plan which three years to choose.

Founders should check turnover limits and the definition of eligible business.

If your startup is not yet DPIIT-recognised, obtain recognition first.

Key Benefits

Tax holiday for three consecutive years
IMB application prepared properly
Form 10CCB support
Correct claim in the return
Eligibility check

Next Steps & Related Services

After the certificate, claim the deduction when profitable.

Related services: Startup India Registration, Income Tax Return and Accounting.

Common Mistakes

Assuming DPIIT recognition is enough.
Missing Form 10CCB.
Choosing years without profits.
Ignoring turnover limits.
Applying with incomplete documents.

Timeline, Costs & Practical Tips

IMB review takes weeks to months.

Practical tip: prepare accounts and returns for the last three years.

Additional Information

Section 80-IAC of the Income Tax Act supports startups through tax relief.

Practical Scenarios

Scenario 1:

A profitable software startup applies for the IMB certificate.

Scenario 2:

A startup chooses its three tax-free years.

Scenario 3:

An LLP checks eligibility.

Written By

Raghav Sharma

Operations Executive

10+ Years Experience

As seen on

Raghav Sharma has 10+ years of experience covering Company Registration - Operation, MCA Services - Operation, Corporate Operation, Import Export Services - Operation, Goverment Licence Services - Operation, FSSAI - Operation, SEBI - Operation, Labour Compliance - Operation, Fund Raising - Operation, Licence & Certificate - Operations.

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Frequently asked questions

Need clarity?

What is the deduction?

100% of profits for three consecutive assessment years within the first ten.

Who certifies?

The Inter-Ministerial Board of Certification.

What is the turnover limit?

Rs 100 crore.

Which entities qualify?

Companies and LLPs.

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