DPIIT Section 80-IAC Tax Holiday: 100% Tax Exemption for 3 Consecutive Years

स्टार्टअप धारा 80-IAC 3 वर्ष 100% कर छूट योजना

Comprehensive guide to claiming 100% income tax exemption under Section 80-IAC of the Income Tax Act for DPIIT-recognized startups: eligibility criteria, Inter-Ministerial Board (IMB) evaluation, selecting the 3-year holiday block out of 10 years, and Section 56(2)(viib) Angel Tax abolition.

Written by: Author Profile

Direct Tax & CA Review Panel

Chartered Accountancy Review Panel • Senior Direct Tax Review Desk

Reviewed & Fact-Checked by: Technical Review Panel

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Tax Litigation & Legal Review Panel • Tax Appeal & Procedure Review Desk

Published: 1st April 2026•Last Updated: 15th August 2026•Last Reviewed: 15th August 2026

Key Statutory Highlights (FY 2026-27 (AY 2027-28))

100% Profit Deduction: Eligible startups can claim a deduction of 100% of profits and gains derived from an eligible business for 3 consecutive assessment years out of 10 years from incorporation.

Eligibility Criteria: (1) Incorporated as a Private Limited Company or LLP between 01-Apr-2016 and 31-Mar-2025/extended, (2) Total annual turnover does not exceed ₹100 Crore in any FY, (3) Working towards innovation, development, or commercialization of new products/services with scalable business model.

Inter-Ministerial Board (IMB) Approval: Must apply online on Startup India portal and receive certificate of eligibility from the Inter-Ministerial Board.

Angel Tax Abolished: Section 56(2)(viib) tax on premium share issuances is abolished, giving complete tax security to startup equity fundraises.

Who is Eligible & When Does it Apply?

Applicability #1

DPIIT-recognized Private Limited Companies and LLPs meeting the innovation and scalability guidelines.

Step-by-Step Procedure & Compliance Roadmap

Obtain DPIIT Recognition

First obtain Startup India recognition certificate from the DPIIT portal.

Apply for Form 1 (Section 80-IAC Exemption)

Submit Form 1 on startupindia.gov.in with pitch deck, video demo, audited balance sheets, and business innovation proof.

IMB Scrutiny & Certification

Inter-Ministerial Board evaluates the pitch. Upon approval, an 80-IAC certificate is issued.

Claim 100% Deduction in ITR-6

Select 80-IAC block in Schedule 80-IAC of Corporate ITR-6 to pay zero tax on business profits.

Mandatory Documents Checklist

DPIIT Recognition Certificate, Memorandum & Articles of Association, 3-Year Audited Financials, Detailed Pitch Deck & Product Video Link, Form 10CCB CA Audit Certificate

Common Mistakes & Compliance Risks to Avoid

•Forming a company by splitting up or reconstructing an existing business (disqualified u/s 80-IAC(3)).

•Not filing Form 10CCB along with the tax return.

Frequently Asked Questions

Can a startup choose which 3 years to take the tax holiday?

Yes! A recognized startup can choose any 3 consecutive financial years within the first 10 years from the date of its incorporation to claim the 100% profit deduction.

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🛡️ Educational Disclaimer: FinSetu India is an independent educational guidance and calculation platform. Content is published for general citizen awareness based on applicable laws as of FY 2026-27 (AY 2027-28). We do not provide personalized legal/tax advice or file returns directly. Verify current applicable rules on official portals or consult a qualified Chartered Accountant / Tax Lawyer.