Section 80IAC Registration
Section 80IAC Registration allows eligible startups to claim 100% income tax exemption on profits for three consecutive years. Understand eligibility, benefits, documents required, and the complete legal process in India. What is Section 80IAC of the Income Tax Act, 1961? Section 80IAC of the Income-tax Act, 1961 provides a 100% deduction of profits and gains derived from an eligible business carried on by an eligible startup. This deduction is available for any three consecutive assessment years chosen by the startup, out of the first ten years from the date of incorporation. The purpose of this provision is to encourage innovation-driven entrepreneurship in India by offering a tax holiday at the stage when startups need financial flexibility the most. Instead of paying income tax during profitable years, startups can reinvest their earnings into expansion, technology, manpower, and market development. Who is Eligible for Section 80IAC Registration? To claim benefits under Section 80IAC, a startup must strictly comply with the eligibility conditions prescribed under the Income-tax Act and related government notifications. These conditions ensure that only genuine and innovative startups receive the tax benefit. 1. Eligible Entity The startup must be incorporated in India as either a Private Limited Company or a Limited Liability Partnership (LLP). Other forms of entities are not eligible under this section. 2. Date of Incorporation The entity must be incorporated on or after 1 April 2016 and within the time period notified by the Central Government. The incorporation date plays a critical role in determining eligibility. 3. Nature of Business The startup must be engaged in innovation, development, or improvement of products, processes, or services. Alternatively, it should operate a scalable business model with high potential for employment generation or wealth creation. Traditional or routine businesses without innovation may not qualify. 4. Turnover Limit The annual turnover of the startup must remain within the limits prescribed under Startup India guidelines. Exceeding the turnover limit may result in loss of eligibility. 5. No Splitting or Reconstruction The startup should not be formed by splitting up or reconstructing an existing business. This condition ensures that tax benefits are not misused by older businesses restructuring themselves. 6. Mandatory Certification Approval from the Inter-Ministerial Board of Certification is compulsory. Without this approval, deduction under Section 80IAC cannot be claimed. Apply Now Key Benefits of Section 80IAC Tax Exemption ✔ 100% Tax Deduction Eligible startups can claim 100% deduction of profits earned from eligible business activities. ✔ Flexible Selection of Years The deduction can be claimed for any three consecutive years within the first ten years of incorporation. ✔ Better Cash Flow By eliminating income tax liability, startups can reinvest profits into business growth and operations. ✔ Strong Legal & Financial Compliance Section 80IAC registration improves financial credibility with investors and authorities. Legal Provisions Covered Under Section 80IAC Section 80IAC is structured into multiple sub-sections, each defining a specific legal requirement. Strict adherence to these provisions is necessary, as non-compliance may lead to rejection of the claim or future tax scrutiny. Documents Required for Section 80IAC Registration Proper documentation is the backbone of successful Section 80IAC approval. Authorities rely heavily on documents to verify eligibility, innovation, and financial compliance. Any inconsistency or missing information can delay or reject the application. 1. DPIIT (Startup India) Recognition Certificate This certificate confirms that the entity is officially recognised as a startup under the Startup India initiative and is mandatory for 80IAC registration. 2. Certificate of Incorporation Issued by the Registrar of Companies, it establishes the legal existence of the startup and confirms the date of incorporation. 3. MOA / LLP Agreement This document defines the business objectives and activities, which are examined to confirm eligibility under Section 80IAC. 4. CA-Certified Financial Statements Financial statements such as Balance Sheet and Profit & Loss Account help verify turnover limits and profitability. 5. Income Tax Returns (If Filed) Past ITRs and computation of income support the tax exemption claim. 6. Shareholding Pattern / Capital Structure This ensures compliance with ownership conditions and confirms that the business is not reconstructed. 7. Business Description & Innovation Details A detailed explanation of the product, service, innovation, and scalability is critical for board approval. 8. Pitch Deck or Business Presentation (If Required) Used to understand the business model and growth strategy. 9. Declaration of Original Business A self-declaration confirming compliance with Section 80IAC conditions. 10. Additional Documents Any further clarification or documents requested during review must be provided promptly. Register Now Step-by-Step Process for Section 80IAC Registration The Section 80IAC registration process involves a series of statutory and procedural steps that must be followed in the correct order. Each step plays an important role in determining whether a startup is eligible to claim income tax exemption under the Income-tax Act. Careful compliance helps avoid rejection, delays, or future tax complications. Step 1: Obtain DPIIT Startup Recognition The first requirement is to obtain recognition under the Startup India initiative from the Department for Promotion of Industry and Internal Trade (DPIIT). This recognition confirms that the entity qualifies as a startup as per government guidelines, including incorporation date and nature of business. Without DPIIT recognition, a startup is not eligible to apply for tax exemption under Section 80IAC. Step 2: Apply for Section 80IAC Approval After receiving DPIIT recognition, the startup must submit a separate application for tax exemption under Section 80IAC through the Startup India portal. This approval is not automatic and requires the startup to provide complete business details, innovation information, and compliance-related disclosures. The application is examined strictly as per the provisions of the Income-tax Act. Apply Now Step 3: Upload Required Documents All supporting documents must be uploaded carefully and in a consistent manner. These documents are used to verify the startup’s legal existence, originality of business, turnover limits, and financial compliance. Any mismatch, missing document, or incorrect information can lead to delays or rejection of the application. Step 4: Review by Inter-Ministerial Board Once the application is submitted, it is reviewed by the Inter-Ministerial Board of Certification. The
