Who qualifies
- DPIIT recognition as a startup.
- Incorporated as a private limited company or LLP between 1 April 2016 and 31 March 2030.
- Turnover not exceeding ₹100 crore.
- Not formed by splitting up or reconstructing an existing business, or by transferring used plant and machinery beyond the permitted limit.
- Working on innovation, development or improvement of products or processes, or a scalable business model with high potential for employment or wealth creation.
Choosing the three years
The three years can be any consecutive block within the first ten. Early years often have losses, so the deduction is usually worth most in the first profitable years. The choice needs projections, and the certificate should be in hand before the return for the first year claimed.
A company that opts for the concessional corporate tax regime can't also claim this deduction, so the two options need comparing. Minimum alternate tax may still apply to companies claiming the deduction under the old regime.
Documents required
- DPIIT recognition certificate.
- Certificate of incorporation and constitutional documents.
- Financial statements and income-tax returns filed so far.
- Description of the innovation or scalable business model, with evidence — patents, product documentation, traction.
- Board resolution authorising the application.
The process
Confirm DPIIT recognition
Or apply for it first.
Prepare the application
The innovation case, financials and supporting evidence.
File with the Inter-Ministerial Board
Through the Startup India portal.
Respond to queries
The Board may ask for more information.
Claim in the return
Once certified, the deduction is claimed for the chosen years.
Practical notes from our engagements
- DPIIT recognition assumed to be enough. The tax holiday needs the separate IMB certificate.
- Innovation case written generically. The Board looks for something specific. Evidence helps.
- Years chosen without projections. Claiming in loss years wastes the benefit.
How we handle the startup tax holiday
We check eligibility, prepare the IMB application with a specific innovation case, and plan the three years against projections so the deduction is used where it's worth most.
Related services
Frequently asked questions
What is Section 80-IAC?
The startup tax holiday under the 1961 Act — 100% deduction of profits for three consecutive years out of the first ten. Under the Income-tax Act, 2025 it is Section 140.
Who is eligible?
DPIIT-recognised private limited companies and LLPs incorporated between 1 April 2016 and 31 March 2030, with turnover up to ₹100 crore, holding a certificate from the Inter-Ministerial Board.
Is DPIIT recognition the same as the tax exemption?
No. Recognition is the first step; the tax holiday needs a separate certificate from the Inter-Ministerial Board.
Can we choose which three years?
Yes, any three consecutive years within the first ten from incorporation.
Does it apply under the 22% corporate tax regime?
No. A company opting for the concessional regime can't claim this deduction.