Section 80-IAC Tax Exemption — the 3-Year Startup Tax Holiday

What Section 80-IAC Actually Gives You

Section 80-IAC of the Income Tax Act, 1961 provides eligible DPIIT-recognised startups a 100% deduction of business profits for any 3 consecutive assessment years out of their first 10 years from the date of incorporation. Approved startups choose which 3 years to claim — typically the years they expect to be profitable — rather than being locked into the first 3.

Eligibility Criteria

The turnover cap tracks DPIIT recognition's own threshold, revised to ₹200 crore in February 2026 — older guides quoting ₹100 crore are out of date. Confirm the current incorporation-date window and Form-1 requirements on startupindia.gov.in, as the Income-tax Act, 2025 (effective 1 April 2026) may have changed section references.

The Recognition Distinction — Read This Before You Apply

DPIIT recognition ≠ automatic tax exemption. Holding a Startup India / DPIIT recognition number does not, on its own, grant the Section 80-IAC tax holiday. To get it, a startup must file a separate application through the Startup India portal and be certified by the Inter-Ministerial Board (IMB) — a distinct evaluation from the one that grants DPIIT recognition.

This is the single most common gap we see: founders assume their DPIIT certificate already covers the tax benefit, file nothing further, and the 3-year window quietly narrows. We treat DPIIT recognition and the 80-IAC application as two linked but separate filings — and handle both.

Documents Required

• Valid DPIIT (Startup India) recognition certificate
• Certificate of Incorporation
• Board resolution authorising the application
• Latest audited financial statements and Income Tax Returns filed
• Detailed write-up on the innovation, technology or IP driving the business
• Pitch deck, product demo, patents or awards where available
• Memorandum of Association (for the object clause) and PAN of the entity

The 80-IAC Application Process

1. Confirm the entity already holds valid DPIIT recognition — this is a prerequisite, not a parallel step.
2. Assess eligibility against the 80-IAC-specific criteria (entity type, incorporation window, turnover, core focus).
3. Prepare the IMB write-up and compile supporting financial and business documents.
4. File the application to the Inter-Ministerial Board via the Startup India portal.
5. Respond to any IMB queries or requests for clarification.
6. On approval, plan which 3 of the first 10 assessment years to claim the deduction in.

Timeline and Cost

The IMB reviews applications in batches rather than on a rolling basis, so turnaround varies — most applications hear back in a few weeks to a few months, not days. Because the review window is unpredictable, we recommend filing as early in your eligible period as possible rather than waiting until a specific tax year approaches. Our fee is quoted after the free eligibility check, once we've reviewed your entity type, incorporation date and business write-up — there's no fixed published rate because the documentation effort varies by how much of your financial and business case is already in order.

Common Mistakes That Cost Founders the Exemption

• Assuming DPIIT recognition is enough. It isn't — see the distinction above. This is the single biggest reason eligible startups never claim the benefit.
• Filing with the wrong entity type. OPCs and registered partnership firms are eligible for DPIIT recognition but not for 80-IAC — converting to a Private Limited Company or LLP first is sometimes necessary.
• Reusing the DPIIT write-up for the IMB application. The IMB evaluates innovation and scalability differently from DPIIT's recognition criteria; a copy-pasted write-up is a common rejection reason.
• Waiting too long to apply. The 3-year claim window sits inside your first 10 years from incorporation, but the application and review process itself takes time — starting late narrows your options for which years you can claim.

Why This Matters to Your Bottom Line

• 100% profit deduction: no income tax on business profits for the 3 claimed years — a direct, compounding cash benefit while you scale
• Flexible timing: the 3 years don't have to be consecutive from incorporation — choose the years that matter most
• Investor signal: IMB certification is independent third-party validation of your innovation, which investors read as diligence already done
• Ten-year window: you have until year 10 to claim it, but the application and IMB review process takes time — starting early protects the window

At SNB Consultancy, we don't stop at getting you DPIIT recognised. We take that recognition through to what it's actually meant to unlock — the 80-IAC tax holiday — with the separate IMB filing most advisors leave founders to figure out on their own.

Frequently Asked Questions

What is Section 80-IAC?

A provision of the Income Tax Act that lets eligible startups claim a 100% deduction on profits for 3 consecutive years out of their first 10 years.

Do I need DPIIT recognition first?

Yes. DPIIT recognition is required before applying. We help founders who don't have it yet get recognised first.

Who approves the 80-IAC certificate?

The Inter-Ministerial Board (IMB) reviews and approves applications through the Startup India portal.

Is approval guaranteed?

No. Approval depends on the board's review of your specific case. We make sure your application and supporting documentation are complete and strong before filing.

Can an OPC or partnership firm apply for 80-IAC?

No — 80-IAC is limited to Private Limited Companies and LLPs, even though OPCs and registered partnership firms can hold DPIIT recognition. If you've incorporated as an OPC or partnership and want 80-IAC eligibility, converting entity type is usually the first step — talk to us about what that involves for your case.

How much does it cost and how long does it take?

The eligibility check is free. Our service fee is shared clearly after we review your case, and the IMB's own review typically takes a few weeks to a few months once filed.