DPIIT-Startup India Exemption Us 80AC

In the Startup India scheme of the government of India, startups can request tax exemption for three years from the date of their creation. We aid startups in getting tax exemption as per 80IAC.

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Startup tax exemption under Section 80iac of the Income Tax Act

Newly formed and incorporated startups frequently need more financial support in the beginning stages of operation, affecting their profits and sales. This is made worse if, of the little earnings they manage to make, a large part is spent on ensuring different tax and legal compliances, leaving nothing to invest in further. The government has granted various tax exemptions to startups in India to help overcome this difficult problem, and one of the exemptions is in section 80-iac under the income tax, according to this section. A tax deduction can be claimed for eligible startups' earnings for three consecutive financial years. Also, they are assessing their total tax-deductible income. But, such a startup must be at most 10 years since incorporation/registration and must not have a turnover exceeding rs.100 crores in any financial year since its establishment.

Advantages of the startup tax exemption under the 80iac

Of the tax exemptions available for startups in India, the tax benefits of the exemption u/s iac of the income tax are the most important. The following table provides a quick and detailed explanation of all these advantages.

100% tax deduction

Tax deduction of 100% on profits is possible by qualified startups in calculating their tax-deductible income.

Tax exemption for startups

Eligible startups get tax exemption under section 80 ac for three consecutive financial years within the first to 10 years of the startup's incorporation or registration.

Reduced tax burden

Deductions, as per 80-iac, can help startups with the tax burden they initially encounter.

It is simple and affordable to claim

To claim deductions based on 80- ac, an easy online application to file without government fees.

Documents required to claim the section 80-iac exemption

Complete and accurate documentation is crucial for the approval of the 80-iac application. Some of the required documents are essential for the company's incorporation, such as accounts statements, income tax returns, and documents confirming the concept and the company's current state.

S.no List of details and documents
1. Name address, name, and the nature of business operation of the company that is starting
2. Date of incorporation number and CIN / LLPIN
3. Permanent account number (pan) of the startup
4. Dipp number of startup after it has been recognized by the DPIIT
5. Contact information of the startup (e-mail id and contact number)
6. A copy of the memorandum of association of the company or LLP deed of the LLP or registered partnership agreement
7. A copy of the board resolution in the event of a company, in the event that there are any
8. Copies of the balance sheet of the startup and profit and loss report for the last three financial years, verified by a qualified chartered accountant
9. Copies of income tax returns from the last three financial years are mandatory, provided that the incorporation was made prior to 1st April, 2018.
10. Copy of the certificate obtained pursuant to section 56 of the income tax act (eligibility under this section)
11. Link to video and copy of the pitch deck are needed based on the stage at which the startup takes place (ideation or validation, early traction/ scaling)

We suggest you send soft copies of the documents with the questionnaire. Once you complete that, the startup advisers from our team will share it with you. We will check the details and legal documents you send to us. We invite you to contact us for more clarifications.

Qualify for tax exemption on startup businesses by 80iac

To be eligible for exemptions under section 80-iac in the income tax act, businesses must meet certain requirements. The complete list of these criteria is provided in the following table. Based on these criteria, one must establish whether one is eligible for startup tax exemptions under s. 80iac before the filing process gets underway.

Not older than 10 years old

The deduction can be claimed in any three years within the first 10 years from the date of incorporation/registration of the startup.

New and original entity

The startup cannot be created by a split or re-establishing the existing entity if the reconstruction is done under section 33b of the income tax act.

Recognized as a startup by the DPIIT

The department of promotion of industry and internal trade must acknowledge startups. The startup has received the DPIIT recognized certificate.

Works in conjunction with new plant and machinery

The startup should be created by something other than transferring equipment and plants currently in operation.

A company, an LLP, or a registered partnership firm

The company must be a corporation or limited liability partnership or registered as a partnership company. Startups that are registered as a different type of business entity cannot claim this deduction.

Incorporated from 1st April 2016.

Any startup incorporated/registered after 1st April 2016 till date can avail of the tax exemption u/s 80iac

A turnover not exceeding rs.100 crores

The turnover can be up to rs.100 million for each financial year, for which a deduction under 80iac is sought during the relevant assessment year.

Employment, financial growth, or the creation of wealth as the primary goals.

The startup should be operating to generate employment, financial growth, and wealth creation.

You must be involved in developing new products, services, or methods.

The startup must create new and innovative products, processes, services, or products or create a better version of existing ones. But entities formed by the dissolution or re-establishing of an existing business need to be qualified to receive DPIIT startup tax benefits.

What authority is the one who approves the application for exemption from 80iac?

Section 80iac provides a 100% tax deduction for 3 years to newly-incorporated companies. To take advantage of this deduction, the application must be submitted and then approved by DPIIT. Department of promotion of industry and internal trade (DPIIT).

What business entities are eligible for deductions under the 80iac?

Only LLP and companies recognized as startups through the DPIIT can claim exemptions under section 80iac under the income tax act.

How long will the 80iac application take to be approved?

The time needed for processing applications under 80iac is contingent on various variables, and the final decision depends on the inter-ministerial committee. Where they decide at the meetings of the imb. Thus, predicting a precise timeframe is not workable, but the application process is completed within two to three weeks.

Can my business avail of the exemption 80iac if it is created by moving machinery outside India?

Startups may qualify for the exemption of 80iac when they are formed through the transfer of machinery previously used outside of India but not used by the company in question. Also, before its installation outside of India, the machine must be in no way used in India and then brought to India or exported to India. No deduction for depreciation was ever permitted in India.

Then when will the 80iac exemption stop automatically?

A company ceases to be a startup after 10 years from the date of incorporation or registration if the turnover of any prior year is more than one crore rupees.

Step 1 - documentation

The process of obtaining the 80-iac deduction in the income tax act completely depends on the application. Like all applications, a long list of documents must be submitted. As we see, documents are the most essential element of any application. As one of the primary reasons for its final approval or rejection by the relevant authority, we strongly suggest all applicants ensure the availability of all documents needed to submit an application for tax exemption under the 80iac in the correct format and updated with current information in advance to avoid delays later.

Step 2 - login to the startup India portal

After having all the necessary documents, follow the necessary documents. The following step would be to go to the website for startup India, and under the heading "recognition" on the main menu, click "apply for tax exemptions." you must sign in to the portal with an account with login information.

Step 3: fill out the application form

Once you have logged into your account, the form for claiming exemption to the 80-iac will be displayed on your screen. You must fill out these forms with all the required information about the company, including its address, name, business/industry information, contact details, incorporation date, and pan information. Additionally, as the startup has been recognized by the DPIIT the DPIIT, you must provide the DPIIT number mentioned in the startup India recognition certificate.

Step 4: upload all required attachments

After completing all the required information, you can add all the required documents. Such as the documents governing the constitution of the startup (moa or an llp deed) and a copy of the annual accounts. ITR and a, a link, and a pitch deck that explains the concept and the idea behind the creation of this startup.

Step 5: fill in the details of the signatory who may do so.

Once the company's basic information and supporting documents have been uploaded, the final set of information to be included in the application is the authorized signatory's information, including the name of his signature and designation. The authorized signatory is typically one of the directors/ named partners in the company. Chosen to serve this function by the board when it is an entity and partner in the case of an LLP.

Step 6 - submit the application

After all the necessary information has been completed correctly and all documents are in their format of choice, then you can make your application available on the startup India portal itself. The relevant authority will review the application, and if it is approved, you can claim tax deductions under section 80-iac of the application.

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