Summary
DPIIT has approved 187 startups for tax benefits under the revised Section 80-IAC. The eligibility window is now extended to startups incorporated until 1st April 2030, offering a major boost to India’s innovation ecosystem.
Section 80-IAC Tax Relief Extended: Big Boost for DPIIT-Recognised Startups
In a landmark move, the Department for Promotion of Industry and Internal Trade (DPIIT) has approved 187 startups for tax exemption under the revised Section 80-IAC of the Income-tax Act, 1961. This update extends eligibility for tax relief to startups incorporated up to April 1, 2030.
This is a timely relief for India’s startup ecosystem facing capital crunch and regulatory hurdles. Here’s everything you need to know.
What is Section 80-IAC?
Section 80-IAC allows eligible startups to claim 100% tax exemption on profits for 3 consecutive assessment years out of the first 10 years since incorporation.
Key Conditions for Eligibility:
- Must be a DPIIT-recognised startup
- Incorporated as a Private Limited Company or LLP
- Turnover should not exceed ₹100 crore in any financial year
- Must be engaged in innovation, development, or improvement of products or services
- Should not have been formed by splitting or reconstructing an existing business
What’s New in 2025?
| Criteria | Earlier Provision | Revised Provision (2025) |
|---|---|---|
| Last date of incorporation | 1st April 2024 | 1st April 2030 |
| Validity of DPIIT recognition | As per old guidelines | Auto-validated with incorporation |
| Focus sectors | General | Tech, AI, Deep Tech, Clean Energy prioritised |
| No. of startups approved | Limited approvals | 187 approved in latest round |
Source: DPIIT official notification on startupindia.gov.in
How to Apply for Section 80-IAC Exemption
- Get DPIIT Recognition on Startup India Portal
- Apply to CBDT for tax exemption certificate (Form 1 & declaration needed)
- Submit pitch deck, incorporation docs, PAN, and annual reports
Pro Tip from Experts:
Always keep detailed documentation of innovation and R&D expenses. This helps in establishing genuine eligibility under scrutiny.
Benefits of Section 80-IAC for Indian Startups
- Zero income tax for 3 years
- Encourages reinvestment in business
- Improves valuation and investor confidence
- Attracts global VCs due to cleaner cap table
- Reduces early-stage financial pressure
Legal Backing & Government Support
- Income Tax Act, 1961 – Section 80-IAC
- CBDT Notification dated 29.04.2025
- DPIIT Startup India Action Plan
The scheme has already seen success with over 1000 startups having availed the benefit since 2016. The latest move aligns with India’s vision of becoming a $5 trillion economy.
Expert Insight:
“Extending Section 80-IAC eligibility till 2030 provides much-needed tax certainty to new-age startups. It’s a long-pending demand met.”
FAQs on Section 80-IAC Exemption
Q1. Can startups choose any 3 years for exemption?
Yes, any 3 consecutive years out of the first 10 years from incorporation.
Q2. Is tax audit mandatory under 80-IAC?
Yes, audited financials are required while claiming the exemption.
Q3. Does DPIIT recognition guarantee tax exemption?
No. DPIIT recognition is only the first step. You must separately apply to CBDT for tax benefits.
Q4. Can a startup claim both 80-IAC and angel tax relief?
Yes, if eligible under both. But proper documentation is critical.
Final Thoughts
Startups now have 5 more years to incorporate and still claim Section 80-IAC tax relief. With 187 startups already approved, this is a powerful signal of the government’s pro-startup stance.