Income Tax Exemption under Section 80-IAC and checklist

Summary: Form 80-IAC enables DPIIT-recognized startups to claim a 100% tax deduction for three consecutive years within the first ten years of incorporation under the Startup India initiative. Eligible entities must be Private Limited Companies or LLPs incorporated after April 1, 2016, with turnover below Rs. 100 crore and engaged in innovation or scalable business models. The application requires extensive documentation, including shareholding details, board resolutions, income tax returns, audited financials, CA certifications, funding proof, intellectual property records, and employment data. The process involves multiple steps through the portal, including submission of declarations and supporting evidence. Evaluation is based on innovation, scalability, wealth generation, and employment creation through specific grading parameters. Compliance with conditions such as non-reconstruction of existing business and accurate disclosures is mandatory. The framework aims to incentivize genuine startups while ensuring transparency, accountability, and verification before granting tax exemptions.

Form 80-IAC

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Details & Documents Required

The Income Tax Exemption under Section 80-IAC is a key incentive under the Government of India’s Startup India initiative. Eligible startups can avail of a 100% tax deduction for three consecutive financial years within their first ten years of incorporation.

Who Can Apply?

A DPIIT-recognized startup that meets the following criteria:

• Incorporated as a Private Limited Company or LLP.
• Should be incorporated on or after 1^stApril 2016.
• Must be less than 10 years old.
• Annual turnover should be less than ₹100 crore in any financial year.
• Should be working towards innovation, improvement of products/processes/services, or scalable business models with high potential for employment or wealth creation.
• Should not be formed by splitting or reconstructing an existing business.

Required Documents for Application

To apply for 80-IAC exemption, the following documents are required:

1. Shareholding Details: Shareholding pattern as per the Memorandum of Association and the latest updated shareholding structure.

2. Board Resolution: Copies of any resolutions passed concerning the application or eligibility.

3. Income Tax Returns: Acknowledgement receipts for the past three years (or as applicable).

4. Audited Financial Statements: Balance Sheet & Profit and Loss Statement for the past three years (or as applicable), along with specific details of revenue generated and profit/loss during those years.

5. Chartered Accountant (CA) Certification:

• • for Formation of Startup : – Authorisation letter explicitly stating that the startup is not formed by splitting up or reconstruction of an already existing business, except where applicable under Section 33B of the Income Tax Act; The startup is not formed by the transfer of machinery or plant previously used for any purpose. As per suggested format
  • Declaration of Scalability : If there is a >10% growth in revenue from one year to the next OR 25% growth over 2 years OR over 33% growth over 3 years. As per suggested format

6. Proof of Credit Rating: If a credit rating has been obtained from an accredited agency, supporting documents should be provided.

7. Intellectual Property Rights (IPR):Proof of IPR filings, including:

• • Patent/Copyright/Industrial Design filings.
  • journal publications of patents/copyrights/designs.
  • Granted patents/copyrights/designs, if applicable.

8. Awards and Recognitions: Proof of awards at different levels:

• • District-level awards by government or corporate entities.
  • State-level awards by government authorities.
  • National-level awards by government bodies or recognized international agencies, if applicable.

9. Pitch Deck:Any relevant presentations showcasing the business, product, or service.

10. HR Declaration & Employment Records:

• • Regarding Employees Pursuing/ Holding M.Tech/PhD Degrees and Research Papers/Publications. As per suggested format
  • Total direct employment details. As per suggested format
  • Employment of Females, Persons with Disabilities, Persons from SC/ST Categories.As per suggested format
  • Employees Based in Non-Metro Cities.As per suggested format

11. Proof of Investment Received:As per suggested format

• • Declaration Regarding Funding Obtained and Investor Details.
  • Term sheets, investment agreements, or bank statements showing external funding amounts; Investor certificates, funding agreements, or tax returns/GST filings substantiating revenue figures.

How to Apply?

• Go to Step 2 and confirm the details of your recognition.
• Fill in the 80-IAC Details required for Step 2 and proceed to the next step.
• Fill out Step -3 and proceed forward to the next step.
• Add documents and details on Step 4 and move to Step 5.
• Click on I accept terms and conditions, and submit the final Application.

Broad Parameters

Innovation Grading

1.Intellectual Property Creation (Copyrights/ Patents / Industrial Design) – IPR Integration *

(Select Option) (Any One) Attachment is required as per Tick

2. Achievements and Awards *

(Select Option) (Any One) Attachment is required as per Tick

3. Stage of Product/Service*

(Select Option) (Any One) Attachment is required as per Tick

4. Employment of Research Personnel (M.Tech/PHD Holders) *

(Select Option) (Any One) Attachment is required as per Tick

Wealth Generation

1. Funding Obtained from any external source (Both Government & Private Funding) *

2. Revenue Generation *

3. Profitability *

Employment Generation

1. Direct Employment*

2. Employment of Females, Persons with Disabilities, Persons from SC ST categories *

3. Employees based in Non-Metro Cities *

I hereby declare that all information provided in this Form 80-IAC submission is true and accurate to the best of my knowledge. Our startup is duly recognized by the Department for Promotion of Industry and Internal Trade (DPIIT). We confirm that our turnover has not exceeded ₹100 crore in any financial year since incorporation, aligning with the eligibility criteria outlined in Section 80-IAC of the Income Tax Act, 1961. Furthermore, we affirm that our business was not formed by splitting up or reconstructing an existing entity. We understand that any misrepresentation or concealment of facts may result in the revocation of the tax exemption and could attract penalties as per the Income Tax Act.