Section 80 IAC Tax Exemption 100% profit deduction for 3 of your first 10 years.

Section 80-IAC of the Income Tax Act, 1961 is the cornerstone tax benefit under the Startup India initiative. It allows an eligible startup to claim a deduction of 100 percent of profits and gains derived from its eligible business for any three consecutive assessment years out of the first ten years from the date of incorporation. In effect, the startup pays no income tax on its profits for three years that it can choose strategically — typically the years of highest taxable profit — within its first decade of operation.

The exemption is not automatic. The startup must first obtain DPIIT recognition under the Startup India scheme, and then make a separate application for Section 80-IAC certification to the Inter-Ministerial Board (IMB) constituted under the Department for Promotion of Industry and Internal Trade. The IMB evaluates the application on several parameters — innovation in product, process, or business model; scalability; employment generation; wealth creation; and the financial trajectory of the startup. Once approved, the IMB issues a certificate of eligibility specifying the assessment years for which Section 80-IAC can be claimed.

Our Section 80-IAC practice supports DPIIT-recognised startups through eligibility advisory, preparation of the innovation and scalability dossier, drafting and filing of the IMB application with all supporting financials and pitch materials, follow-up during IMB review, and integration of the granted tax holiday into ongoing tax computation and return filing. We also advise on the strategic year selection — picking the three consecutive years that maximise the tax benefit given the startup's revenue and profit trajectory.